CCBI Commercial Capital Bancorp

Commercial Capital Bancorp, Inc. (NASDAQ:CCBI): -- Net Interest Margin Increases Three Basis Points to 3.31% from Second Quarter 2005 -- Net Interest Margin, Excluding Purchase Accounting Adjustments, Increases Five Basis Points to 3.22% from Second Quarter 2005 -- Company Deposits Increase $63 million from Second Quarter 2005 -- Bank Deposits Increase $52 million from Second Quarter 2005 -- Average Exchange Balances of $701 Million for Third Quarter 2005 -- Previously Announced Low-Rate Single Family Loan Portfolio Sales Substantially Completed -- Loan Portfolio and Balance Sheet Growth Anticipated to Increase Beginning Fourth Quarter -- Company Approves Cash Dividend of $0.075 per Share Commercial Capital Bancorp, Inc. (the "Company"), (NASDAQ:CCBI), the holding company for Commercial Capital Bank (the "Bank"), TIMCOR Exchange Corporation ("TIMCOR") and North American Exchange Company ("NAEC"), announced today net income of $16.8 million, or $0.29 per diluted share, for the third quarter of 2005, a decrease of 6% and 9%, respectively, from $18.0 million and $0.32 per diluted share, for the third quarter of 2004. Excluding the $2.9 million of direct costs associated with the Bank's new Commercial Banking Division, as discussed below, the Company's non-GAAP net income totaled $18.5 million, or $0.32 per diluted share, for the third quarter of 2005(1). The Company's net interest margin expanded three basis points to 3.31% for the third quarter of 2005, from 3.28% for the second quarter of 2005. Excluding the purchase accounting adjustments from the Hawthorne Financial Corporation ("Hawthorne") acquisition, the Company's net interest margin expanded five basis points to 3.22% for the third quarter of 2005, from 3.17% for the second quarter of 2005. Additionally, the Company announced today that it has authorized a cash dividend of $0.075 per share to be paid on December 1, 2005 to shareholders of record on November 17, 2005. The Company's net income for the nine months ended September 30, 2005 totaled $59.2 million, or $1.03 per diluted share, increases of 64% and 23%, respectively, from $36.0 million and $0.84 per diluted share, for the nine months ended September 30, 2004. The Company's return on average equity ("ROAE") and return on average assets ("ROAA") for the third quarter of 2005 were 9.89% and 1.30%, respectively, compared to 12.02% and 1.50% for the third quarter of 2004, respectively. The Company's return on average tangible equity and return on average tangible assets for the third quarter of 2005 were 23.93% and 1.41%, respectively, compared to 30.55% and 1.62% for the third quarter of 2004, respectively. The Company's ROAE and ROAA for the nine months ended September 30, 2005 were 11.93% and 1.52%, respectively, compared to 15.05% and 1.53% for the nine months ended September 30, 2004, respectively. The Company's return on average tangible equity and return on average tangible assets were 28.75% and 1.64%, respectively, for the nine months ended September 30, 2005, compared to 30.95% and 1.61%, for the nine months ended September 30, 2004, respectively. The Company's financial results include the effects of the acquisition of Hawthorne, which closed on June 4, 2004. The financial data for periods prior to February 17, 2005 do not include the impact of the TIMCOR acquisition. The financial data for periods prior to May 24, 2005 do not include the impact of the NAEC acquisition. Stephen H. Gordon, Chairman and Chief Executive Officer, stated, "This quarter included the expenses related to the investment made in establishing the Company's previously announced Commercial Banking Division, which is now operational and gaining traction; the effect of the previously announced balance sheet-driven, asset/liability management strategies; and the impact of its two 1031 exchange companies. We are pleased with our third quarter's non-GAAP results of $0.32 per diluted share, totaling $18.5 million, which exclude the expenses associated with the Commercial Banking Division. With the previously announced sales of lower-rate, held for sale single family loans largely behind us, combined with a strong adjustable rate loan origination pipeline, increased deposit balances, an expanded net interest margin, strong local markets, and strong asset quality, we feel that the Company is well positioned as we head towards 2006." Gordon added, "While not straying from the Company's disciplined approach to asset quality, we believe that by maintaining a keen eye on liability management and building a strong and diverse core deposit franchise in multiple markets and economies across the state, we will further enhance shareholder value." -0- *T ($ in 000's, Year to Year to except per Q3 Q2 Q3 Date Date share data) 2005 2005 2004 9/30/2005 9/30/2004 -------- -------- -------- ---------- ---------- Net income $ 16,836 $ 19,325 $ 18,004 $ 59,248 $ 36,029 Basic EPS 0.30 0.35 0.34 1.08 0.90 Diluted EPS 0.29 0.34 0.32 1.03 0.84 Net interest income 38,265 38,925 37,877 115,525 74,554 Net interest margin 3.31% 3.28% 3.49% 3.29% 3.42% Total revenues $ 73,298 $ 71,576 $ 60,602 $ 210,864 $ 120,640 ROAA 1.30% 1.47% 1.50% 1.52% 1.53% ROAA -- Tangible 1.41 1.59 1.62 1.64 1.61 ROAE 9.89 11.62 12.02 11.93 15.05 ROAE -- Tangible 23.93 28.11 30.55 28.75 30.95 Efficiency ratio 43.47 33.32 30.59 35.77 28.06 Core Loan Fundings(2) $570,196 $599,303 $544,953 $1,764,628 $1,193,972 Total Loan Fundings(3) 609,894 624,715 583,184 1,842,433 1,309,246 *T Some of the Company's and Bank's third quarter 2005 highlights and achievements include: -- The Company's net interest margin increased three basis points to 3.31% for the third quarter of 2005, compared to 3.28% for the second quarter of 2005 and decreased 18 basis points compared to 3.49% for the third quarter of 2004. The Company's net interest margin, excluding the purchase accounting adjustments from the Hawthorne acquisition, increased five basis points to 3.22% for the third quarter of 2005, compared to 3.17% for the second quarter of 2005 and decreased one basis point compared to 3.23% for the third quarter of 2004. The Company's net interest spread increased four basis points to 3.16% for the third quarter of 2005, compared to 3.12% for the second quarter of 2005 and decreased 23 basis points compared to 3.39% for the third quarter of 2004. The Company's yield on interest-earning assets increased 24 basis points to 5.70% for the third quarter of 2005 compared to the second quarter of 2005, while the Company's cost of funds increased 19 basis points to 2.46%. -- The Company's total loan fundings, which includes loans originated and purchased, were $609.9 million during the third quarter of 2005, a decrease of 2% and an increase of 5%, respectively, compared to $624.7 million and $583.2 million for the second quarter of 2005 and third quarter of 2004, respectively. The Company's core loan fundings were $570.2 million during the third quarter of 2005, a decrease of 5% and an increase of 5%, respectively, compared to $599.3 million and $545.0 million for the second quarter of 2005 and third quarter of 2004, respectively. -- The Company entered the fourth quarter of 2005 with a total loan pipeline of $487 million at September 30, 2005, a decrease of 10% from $542 million at June 30, 2005. The Company entered the fourth quarter of 2005 with a core loan pipeline of $478 million at September 30, 2005, a decrease of 7% from $514 million at June 30, 2005. -- The Company's multi-family loan portfolio grew during the third quarter of 2005 at an annualized rate of 13% to $2.9 billion at September 30, 2005, and now represents 74% of total loans held for investment. The Company's commercial real estate loan portfolio grew during the third quarter of 2005 at an annualized rate of 13% to $534.6 million at September 30, 2005, from $518.1 million at June 30, 2005, and now represents 14% of total loans held for investment. During the third quarter of 2005, the Company's single family loans held for investment portfolio increased approximately $50 million, which was primarily a result of a transfer of certain loans from the held for sale portfolio, as management now intends to hold these loans for investment. -- During the third quarter of 2005, the Company completed the sale of $160.5 million of loans, which included $145.9 million of single family loans that were either classified as held for sale at June 30, 2005 or funded and designated as held for sale during the quarter. At September 30, 2005, the Company's loans held for sale had declined to $165.8 million, which reflects loan sales, the reclassification to held for investment as discussed above, as well as the loan fundings and payoff activity that occurred during the third quarter of 2005. -- The Company's allowance for loan losses was 0.73% of net loans held for investment at September 30, 2005, compared to 0.76% at June 30, 2005, and 0.94% at September 30, 2004. Nonperforming assets declined to $8.9 million, or 0.17% of total assets at September 30, 2005, compared to $12.1 million, or 0.23% of total assets at June 30, 2005. At September 30, 2005, the allowance for loan losses totaled 321% of nonaccrual loans, compared to 237% and 723% at June 30, 2005 and September 30, 2004, respectively. -- The Company's total revenues, defined as interest income plus noninterest income, equaled $73.3 million for the third quarter of 2005, an increase of 2% and 21% from $71.6 million and $60.6 million for the second quarter of 2005 and third quarter of 2004, respectively. -- In July 2005, the Company announced the expansion of its existing Financial Services Group efforts with the formation of the Commercial Banking Division within the Bank, which focuses on the business banking, treasury and cash management and other depository products and services needs of financial services companies such as title and escrow companies, 1031 exchange accommodators, homeowners associations, property management companies, non-real estate escrows and other fiduciary and corporate financial services companies. -- At September 30, 2005, the Company had repurchased a total of 1,868,100 shares of its common stock at an average price of $19.27 per share in accordance with its authorized stock repurchase plans, of which 72,000 shares were repurchased during the third quarter of 2005 at an average price of $18.50 per share. On October 12, 2005, the Company announced that its Board of Directors authorized an additional repurchase program, providing for the repurchase of up to $20 million of the Company's outstanding shares of common stock. The program will take effect upon completion of the Company's current stock repurchase program, which was authorized in January 2005. At September 30, 2005, the Company has remaining authorization to repurchase 532,463 shares under its January 2005 approved program. RECENT DEVELOPMENTS On October 20, 2005, the Company announced that it had entered into a definitive agreement to acquire Calnet Business Bank, National Association. The all stock transaction is valued at approximately $40 million and is expected to close in the first quarter of 2006. At June 30, 2005, Calnet had total assets of $147.5 million, total deposits of $124.9 million, total loans of $98.3 million and total shareholders' equity of $21.5 million. Calnet conducts its Greater Sacramento Valley deposit gathering and lending business from a single location in Sacramento. Calnet's lending programs focus on commercial real estate, construction and business loans within the Greater Sacramento Valley of California. Calnet's loans to deposits ratio, expressed as a percentage, was 79%, at June 30, 2005. For the second quarter ended June 30, 2005, noninterest-bearing deposits averaged $53.4 million or 42% of average deposits, while interest bearing deposits averaged $74.8 million and had an average cost of 1.93%. Also during the second quarter of 2005, Calnet's cost of funds, which includes noninterest-bearing deposits, was 1.13%, and its net interest margin was 4.96%. As reported by Calnet, since July 2005, Calnet has operated in compliance with a formal agreement with the Office of the Comptroller of the Currency with respect to matters relating to its internal controls. The Company, as part of its overall due diligence, reviewed the regulatory criticisms and Calnet management's corrective actions. The closing of the Calnet acquisition by the Company is subject to approval by Calnet shareholders and the Office of Thrift Supervision, the Company's regulator. NET INTEREST INCOME The Company's net interest income increased 1% and 55% to $38.3 million and $115.5 million for the third quarter and nine months ended September 30, 2005, respectively, from $37.9 million and $74.6 million for the third quarter and nine months ended September 30, 2004, respectively. The Company's yield on interest-earning assets increased 24 basis points to 5.70% for the third quarter of 2005, compared to 5.46% for the second quarter of 2005 and increased 45 basis points compared to 5.25% for the third quarter of 2004. The Company's yield on total loans increased 27 basis points to 5.88% for the third quarter of 2005 compared to 5.61% for the second quarter of 2005 and increased 47 basis points compared to 5.41% for the third quarter of 2004. The Company's cost of interest-bearing liabilities increased 20 basis points to 2.54% for the third quarter of 2005, compared to 2.34% for the second quarter of 2005 and increased 68 basis points compared to 1.86% for the third quarter of 2004. The Company's cost of interest-bearing deposits increased 36 basis points to 2.64% for the third quarter of 2005, compared to 2.28% for the second quarter of 2005 and increased 107 basis points compared to 1.57% for the third quarter of 2004. The Company's cost of funds, including the effect of noninterest-bearing deposits, increased 19 basis points to 2.46% for the third quarter of 2005, compared to 2.27% for the second quarter of 2005 and increased 64 basis points compared to 1.82% for the third quarter of 2004. NONINTEREST INCOME Noninterest income increased 106% and 115% to $7.4 million and $18.1 million for the third quarter and nine months ended September 30, 2005, respectively, from $3.6 million and $8.4 million for the third quarter and nine months ended September 30, 2004, respectively. Fee income from 1031 exchange transactions totaled $1.6 million and $3.3 million for the third quarter and nine months ended September 30, 2005, respectively. During the third quarter of 2005, the Company substantially completed the previously announced remix of the composition of its loan portfolio by selling $145.9 million of single family residential loans, which contributed to gains on sale of loans of $1.5 million and $4.9 million for the third quarter and nine months ended September 30, 2005, respectively, compared to $72,000 and $214,000 for the third quarter and nine months ended September 30, 2004, respectively. During the third quarter of 2005, the Company recorded $1.0 million of noninterest income related to the release of a litigation reserve held for a matter in which the Company received a favorable ruling from an appeals court. NONINTEREST EXPENSES The Company's general and administrative expenses totaled $19.9 million and $47.8 million for the third quarter and nine months ended September 30, 2005, respectively, compared to $12.7 million and $23.3 million for the third quarter and nine months ended September 30, 2004, respectively. The third quarter of 2005 includes approximately $2.9 million of direct expenses related to the Commercial Banking Division. This included approximately $1.2 million of salaries and benefits and additional non-cash stock compensation expense, directly attributed to the Commercial Banking Division. In addition, the Company recorded $1.7 million of professional and legal costs associated with the start up of this division, as well as with the Company's defense in the previously disclosed related litigation. The acquisitions of TIMCOR in February 2005 and NAEC in May 2005 also contributed to the increase in general and administrative expenses in the third quarter of 2005 compared to the third quarter of 2004. The Company's efficiency ratio was 43.47% and 35.77% for the third quarter and nine months ended September 30, 2005, respectively, compared to 30.59% and 28.06% for the third quarter and nine months ended September 30, 2004, respectively. Excluding the costs associated with the Commercial Banking Division, the Company's efficiency ratio would have been 37.04%, for the third quarter ended September 30, 2005. General and administrative expenses were 1.53% and 1.22% of average assets for the third quarter and nine months ended September 30, 2005, respectively, compared to 1.05% and 0.99% for the third quarter and nine months ended September 30, 2004, respectively. Excluding the costs associated with the Commercial Banking Division, general and administrative expenses were 1.30% of average assets for the third quarter ended September 30, 2005. INCOME TAXES The Company's effective tax rate was 34.42% and 36.59% for the third quarter and nine months ended September 30, 2005, respectively, compared to 37.04% and 38.10% for the third quarter and nine months ended September 30, 2004, respectively. The reduction of the Company's effective tax rate during the periods ended September 30, 2005 compared to the year ago periods reflects the realization of larger amounts of low income housing and other tax credits, the anticipation of additional tax credits to be received before the end of 2005, and the origination of income property loans in enterprise zones that generate certain state tax benefits. BALANCE SHEET AND CAPITAL The Company's total consolidated assets increased to $5.24 billion at September 30, 2005, compared to $5.18 billion and $4.97 billion at June 30, 2005 and September 30, 2004, respectively. Total loans, which include loans held for investment, net of allowances, and loans held for sale, totaled $4.07 billion, compared to $4.05 billion and $3.88 billion at June 30, 2005 and September 30, 2004, respectively. At September 30, 2005, multi-family loans held for investment totaled $2.90 billion, representing 74% of total loans held for investment, an increase of 3% and 30% from $2.81 billion at June 30, 2005, and $2.24 billion at September 30, 2004, respectively. At September 30, 2004, multi-family loans represented 57% of total loans held for investment. At September 30, 2005, the Company's commercial real estate loan portfolio totaled $534.6 million, representing 14% of total loans held for investment, an increase of 3% and 23% from $518.1 million at June 30, 2005, and $435.1 million at September 30, 2004, respectively. At September 30, 2004, commercial real estate loans represented 11% of total loans held for investment. At September 30, 2005, 58% of the Company's total loan portfolio matures or is tied to an index that adjusts within one month, virtually unchanged from June 30, 2005. In addition, 69% of the Company's total loan portfolio matures or has an interest rate scheduled to reset within six months from September 30, 2005 and 72% matures or resets within one year from September 30, 2005, both virtually unchanged from June 30, 2005. The Company's total loan portfolio had a weighted average duration to maturity or reset of 11.6 months at September 30, 2005, compared to 11.8 months at June 30, 2005. The Company's securities portfolio totaled $408.3 million at September 30, 2005, a decrease of 8% and 16% from $444.5 million and $486.2 million at June 30, 2005 and September 30, 2004, respectively. Mortgage-backed securities were 8% of total assets at September 30, 2005. The Bank's deposits totaled $2.76 billion at September 30, 2005, an increase of 2% and 19% from $2.70 billion and $2.32 billion at June 30, 2005 and September 30, 2004, respectively. The Bank's transaction account deposits totaled $1.70 billion at September 30, 2005, an increase of 3% and 41% from $1.65 billion and $1.20 billion at June 30, 2005 and September 30, 2004, respectively. The exchange balances of TIMCOR and NAEC are classified as borrowings on the consolidated balance sheet, and included as transaction account deposits on the Bank's balance sheet. The Company had average exchange balances of $700.8 million for the third quarter of 2005, an increase of 30% from $539.2 million for the second quarter of 2005, the increase reflects the impact of the first full quarter since the acquisition of NAEC. The Company's consolidated deposits totaled $2.10 billion at September 30, 2005, compared to $2.03 billion and $2.30 billion at June 30, 2005 and September 30, 2004, respectively. The Company's consolidated transaction account deposits totaled $1.04 billion at September 30, 2005, compared to $977.3 million and $1.19 billion at June 30, 2005 and September 30, 2004, respectively. The Company's time deposits totaled $1.06 billion at September 30, 2005, and June 30, 2005 compared to $1.11 billion at September 30, 2004. Borrowings totaled $2.41 billion at September 30, 2005, compared to $2.42 billion and $2.02 billion at June 30, 2005 and September 30, 2004, respectively. FHLB advances totaled $1.51 billion at September 30, 2005, compared to $1.52 billion and $1.83 billion at June 30, 2005 and September 30, 2004, respectively. At September 30, 2005, the Company's junior subordinated debt issued to its unconsolidated trust subsidiaries totaled $150.1 million, compared to $150.3 million at June 30, 2005, and $135.2 million at September 30, 2004. Stockholders' equity totaled $680.7 million at September 30, 2005, an increase of 2% and 12% from $668.5 million and $608.7 million at June 30, 2005, and September 30, 2004, respectively. Tangible stockholders' equity totaled $281.2 million, an increase of 5% and 15% from $268.8 million and $245.2 million at June 30, 2005, and September 30, 2004, respectively. The Company's equity to assets and tangible equity to assets ratios were 13.00% and 5.37% at September 30, 2005, respectively, compared to 12.90% and 5.19% at June 30, 2005, respectively, and compared to 12.26% and 4.94% at September 30, 2004, respectively. The Company's tangible equity to tangible assets ratio was 5.82% at September 30, 2005, compared to 5.62% and 5.33% at June 30, 2005 and September 30, 2004, respectively. Book value per share totaled $12.23 at September 30, 2005, an increase of 1% and 9% from $12.07 and $11.20 at June 30, 2005, and September 30, 2004, respectively. Tangible book value per share totaled $5.05 at September 30, 2005, an increase of 4% and 12% from $4.85 and $4.51 at June 30, 2005, and September 30, 2004, respectively. The capital ratios of the Bank continued to exceed federal regulatory requirements for classification as a "well-capitalized" institution. The Bank's core, tier one risk-based and total risk-based capital ratios are estimated to be 8.91%, 11.93% and 12.73% at September 30, 2005, respectively. LOAN FUNDINGS The Company's total loan fundings, which includes loans originated and purchased, were $609.9 million during the third quarter of 2005, a decrease of 2% and an increase of 5% from $624.7 million and $583.2 million, for the second quarter of 2005 and third quarter of 2004, respectively. The Company's core loan fundings were $570.2 million during the third quarter of 2005, a decrease of 5% and an increase of 5% from $599.3 million and $545.0 million, for the second quarter of 2005 and third quarter of 2004, respectively. The Company purchased $10 million of adjustable rate income property loans and construction loans during the third quarter of 2005. The Company's total loan fundings increased 41% to $1.84 billion during the nine months ended September 30, 2005, from $1.31 billion for the nine months ended September 30, 2004. The Company's core loan fundings increased 48% to $1.76 billion during the nine months ended September 30, 2005, from $1.19 billion for the nine months ended September 30, 2004. The Company's core loan fundings for the three months ended September 30, 2005 consisted of $298.6 million of multi-family real estate loans, $54.3 million of commercial real estate loans, $96.6 million of single family residential real estate loans, $112.2 million of construction and land loans, and $8.5 million of business and other loans. Of the Company's $570.2 million of core loan fundings during the third quarter of 2005, 98% of loans held for investment were adjustable rate loans, of which 72% reprice within one year. The value of loans in the Company's total loan pipeline was $487 million at September 30, 2005, a decrease of 10% and an increase of 38% compared to $542 million and $353 million at June 30, 2005 and September 30, 2004, respectively. The value of loans in the Company's core loan pipeline was $478 million at September 30, 2005, a decrease of 7% and an increase of 48% compared to $514 million and $322 million at June 30, 2005 and September 30, 2004, respectively. PORTFOLIO ASSET QUALITY Nonperforming assets totaled $8.9 million at September 30, 2005, a decrease of $3.2 million from the $12.1 million balance at June 30, 2005. The decrease in nonperforming assets is due to the removal of one construction loan offset by the addition of one defaulted single family residential loan during the third quarter of 2005. The single family residential loan was originated by Hawthorne and acquired through the Company's acquisition of Hawthorne. This loan is considered impaired from a timeliness of repayment perspective. However, based on management's analysis, no specific reserve is warranted as of September 30, 2005 as there is sufficient collateral to secure the loan principal balance. The overall adequacy of the allowance for loan losses is reviewed by the Bank's Internal Asset Review Committee on a quarterly basis and submitted to the Board of Directors for approval. The Internal Asset Review Committee's responsibilities consist of risk management, as well as problem loan management, which include ensuring proper risk grading of all loans and analysis of specific allocations for all classified loans. The Company's review of its allowance for loan losses at September 30, 2005 indicated that a provision for loan losses for the third quarter of 2005 was not required and that the allowance for loan losses is adequate to cover potential losses inherent in the loan portfolio. At September 30, 2005, the Company had total assets of $5.24 billion and the Bank had total deposits of $2.76 billion. The Bank operates banking offices located in Westlake Village (Ventura County), Tarzana, Malibu, Beverly Hills, Baldwin Hills, Westchester, Hawthorne, Manhattan Beach, Gardena, Hermosa Beach, Torrance, Redondo Beach (Los Angeles County), Orange, Irvine, Rancho Santa Margarita (Orange County), Riverside (Riverside County), La Jolla, Del Mar, San Diego (San Diego County), and San Mateo (San Mateo County), and lending offices, located in Corte Madera, San Mateo, Oakland, Encino, Glendale, Los Angeles, El Segundo, Irvine, Riverside, and La Jolla, California, with plans to open a banking office in the Crystal Cove Promenade in Newport Coast, California in 2005. The Bank was the 3rd largest multi-family lender in California during the 12 months ended June 30, 2005 (source: Dataquick Information Systems). The Company is a leading Section 1031-exchange accommodator and facilitates exchange transactions nationwide through the TIMCOR and North American Exchange Company brand names through the companies' headquarters in Los Angeles and Walnut Creek, California, respectfully, offices located in Long Beach and La Jolla, California; Scottsdale, Arizona; Houston, Texas; Chicago, Illinois; and Miami, Florida; and through a presence in Seattle, Washington; Las Vegas, Nevada; Denver, Colorado; Dallas, Texas; Charlotte, North Carolina; and Washington, DC. CONFERENCE CALL AND WEBCAST INFORMATION Analysts and investors may listen to a discussion of the third quarter of 2005 performance and participate in the question/answer session either by dialing the phone number listed below, or through viewing a live video webcast of the discussion accessed through a link on the home page of the Company's website at www.commercialcapital.com. The multimedia webcast enables participants to listen to the discussion and simultaneously view the video broadcast, tables, charts, an outline of the performance highlights, and submit questions for live response from the hosts. Windows Media player is required for viewing the video webcast. Interested parties can download the slide presentation from the Company's website prior to the start of the call. It is recommended that participants dial into the call, or log in to the webcast, approximately 5 to 10 minutes prior to the event. -0- *T Conference Call Date: Monday, October 24, 2005 Time: 7:00 a.m. PDT (10:00 a.m. EDT) Phone Number (866) 203-3436 International Dial-in Number (617) 213-8849 Access Code: 84532368 Webcast Date: Monday, October 24, 2005 Time: 7:00 a.m. PDT (10:00 a.m. EDT) Webcast URL: www.commercialcapital.com Windows Media player is required *T Replay Information: for those who are unable to participate in the call or webcast live, an archive of the webcast will be available on the Company's website at www.commercialcapital.com beginning approximately 2 hours following the end of the call. To listen to the call replay dial (888) 286-8010, or for international callers dial (617) 801-6888, the access code for either replay number is 46490116. The webcast archive and call replay will be available until November 5, 2005. This press release and the aforementioned webcast may include forward-looking statements related to the Company's plans, beliefs and goals, which involve certain risks, and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors: competitive pressure in the banking industry; changes in the interest rate environment; the health of the economy, either nationally or regionally; the deterioration of credit quality, which would cause an increase in the provision for possible loan and lease losses; changes in the regulatory environment; changes in business conditions, particularly in California real estate; volatility of rate sensitive deposits; asset/liability matching risks and liquidity risks; changes in the securities markets and, with respect to the Company's pending acquisition of Calnet Business Bank, governmental approvals of the merger; the stockholders of Calnet may fail to provide the required approval to consummate the merger. The Company undertakes no obligation to revise or publicly release any revision to these forward-looking statements. This press release may be deemed to be solicitation material with respect to the proposed acquisition of Calnet and the issuance of shares of common stock by the Company pursuant to the merger. In connection with the proposed transaction, a registration statement on Form S-4 will be filed with the SEC. The registration statement will contain a proxy statement/prospectus to be distributed to the shareholders of Calnet in connection with their vote on the merger. SHAREHOLDERS OF CALNET ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. The final proxy statement/prospectus will be mailed to shareholders of Calnet. Investors and security holders will be able to obtain the documents free of charge at the SEC's website, www.sec.gov. In addition, investors may obtain free copies of the documents filed with the SEC by the Company by contacting: Investor Relations, Commercial Capital Bancorp, Inc., 8105 Irvine Center Drive, 15th Floor Irvine, CA 92618, telephone: 949-585-7500 or by visiting the Company's website at www.commercialcapital.com, or from Calnet by contacting Kevin R. Watson, Chief Financial Officer, Calnet Business Bank, 1565 Exposition Blvd., Sacramento, CA 95815, telephone: 916-927-7000 or by visiting Calnet's website at www.Calnetbank.com. Calnet and their directors and executive officers and other members of management and employees may be deemed to participate in the solicitation of proxies in respect of the proposed transactions. Information regarding Calnet's directors and executive officers is set forth in its proxy statement, which is available by contacting Calnet at the telephone number set forth above. -0- *T (1) Reconciliations of non-GAAP measures to GAAP results are included at the end of this release. (2) The Company defines core loan fundings to exclude those loans funded through its strategic alliance with Greystone Servicing Corporation, a Fannie Mae DUS lender, and the Company's other broker and conduit channels. (3) The Company defines total loan fundings to include loans that are originated or purchased by the Company during the period. COMMERCIAL CAPITAL BANCORP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Dollars in Thousands, except per share data) Sept. 30, Sept. 30, 2005 2004 ---------------------------------------------------------------------- ASSETS ----------------------------------------------- Cash and Cash Equivalents $ 69,112 $ 20,445 Securities MBS -- Available For Sale 408,338 486,120 Other Investments -- Available For Sale - 100 ----------------------- Total Securities 408,338 486,220 FHLB Stock 84,314 86,147 Loans Held for Investment Single Family 246,400 957,825 Multi-family 2,897,778 2,235,427 Commercial Real Estate 534,599 435,075 Construction 186,583 213,656 Land 48,414 55,786 ----------------------- Total Real Estate Loans 3,913,774 3,897,769 Business and Other Loans 18,085 13,399 ----------------------- Total Loans Held for Investment 3,931,859 3,911,168 Net Deferred Fees, Premiums and Discounts 319 (11,740) Allowance for Loan Losses (28,723) (36,846) ----------------------- Total Loans Held for Investment, Net 3,903,455 3,862,582 Loans Held for Sale 165,760 17,620 ----------------------- Total Loans 4,069,215 3,880,202 Fixed Assets -- Net 16,624 9,989 Foreclosed Assets - - Accrued Interest Receivable 19,652 16,819 Goodwill 394,080 357,367 Core Deposit Intangible 5,414 6,105 Bank-Owned Life Insurance 93,290 46,270 Affordable Housing Investments 33,956 17,261 Other Assets 41,664 39,951 ---------------------------------------------------------------------- TOTAL ASSETS $5,235,659 $4,966,776 ====================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY ----------------------------------------------- Deposits Demand Deposits -- Noninterest-Bearing $ 140,185 $ 92,950 Demand Deposits -- Interest-Bearing 74,063 80,267 Money Market Checking 212,637 419,760 Money Market Savings 438,313 298,165 Savings 173,481 293,905 ----------------------- Total Transaction Deposits 1,038,679 1,185,047 Retail Time Deposits 1,001,281 1,040,634 Broker Time Deposits 55,845 72,961 ----------------------- Total Time Deposits 1,057,126 1,113,595 ----------------------- Total Deposits 2,095,805 2,298,642 Borrowings FHLB Advances 1,510,917 1,831,798 Exchange Balances 679,526 - Junior Subordinated Debentures 150,107 135,225 Other Borrowings 69,000 57,000 ----------------------- Total Borrowings 2,409,550 2,024,023 Other Liabilities 49,578 35,403 ---------------------------------------------------------------------- TOTAL LIABILITIES 4,554,933 4,358,068 STOCKHOLDERS' EQUITY 680,726 608,708 ---------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,235,659 $4,966,776 ====================================================================== Operating Data Performance Ratios and Other Data: Sept. 30, Sept. 30, 2005 2004 ----------------------- Equity to assets at end of period 13.00% 12.26% Tangible equity to assets at end of period 5.37 4.94 Tangible equity to tangible assets at end of period 5.82 5.33 Nonperforming assets $ 8,935 $ 5,095 Nonperforming assets to total assets 0.17% 0.10% Allowance for loan losses to loans held for investment at end of period 0.73 0.94 Allowance for loan losses to nonaccrual loans 321 723 Per Share Data Common shares outstanding at end of period 55,640,363 54,361,762 Book value per share $ 12.23 $ 11.20 Tangible book value per share 5.05 4.51 COMMERCIAL CAPITAL BANCORP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (Dollars in Thousands, except per share data) THREE MONTHS ENDED Sept. 30, Sept. 30, 2005 2004 ---------------------------------------------------------------------- Interest Income Loans $ 60,148 $ 50,777 Securities 4,698 5,301 FHLB Stock 935 891 Fed Funds and Other 83 18 ----------------------- Total Interest Income 65,864 56,987 Interest Expense Deposits 12,852 9,060 FHLB Advances 10,139 8,345 Exchange Balances 1,552 - Junior Subordinated Debentures 2,481 1,611 Other Borrowings 575 94 ----------------------- Total Interest Expense 27,599 19,110 ----------------------- Net Interest Income 38,265 37,877 Recapture of Allowance for Loan Losses - - ----------------------- Net Interest Income after Recapture of Allowance for Loan Losses 38,265 37,877 Noninterest Income Loan Related Fees 1,380 2,217 Retail Banking Fees 558 588 Mortgage Banking Fees 136 137 1031 Exchange Fees 1,620 - Gain on Sale of Loans 1,494 72 Gain on Sale of Securities - - Other Income 2,246 601 ----------------------- Total Noninterest Income 7,434 3,615 Noninterest Expenses Compensation and Benefits 9,251 6,148 Non-Cash Stock Compensation 865 29 Occupancy and Equipment 2,219 2,131 Marketing 393 421 Technology 746 496 Professional and Consulting 2,482 370 Insurance Premiums and Assessment Costs 602 582 Merger-Related - 494 Provision for Unfunded Commitments 56 - Other Expenses 3,251 2,023 ----------------------- Total G&A Expenses 19,865 12,694 Early Extinguishment of Debt - - Amortization of Core Deposit Intangible 163 203 ----------------------- Total Noninterest Expenses 20,028 12,897 ----------------------- Income Before Taxes 25,671 28,595 Income Tax Expense 8,835 10,591 ----------------------- Net Income $ 16,836 $ 18,004 ======================= Operating Data THREE MONTHS ENDED Performance Ratios and Other Data: Sept. 30, Sept. 30, 2005 2004 ----------------------- Earnings per share -- Basic $ 0.30 $ 0.34 Earnings per share -- Diluted 0.29 0.32 Weighted average shares outstanding -- Basic 55,244,376 53,625,568 Weighted average shares outstanding -- Diluted 57,565,159 56,824,595 Return on average assets 1.30% 1.50% Return on average tangible assets 1.41 1.62 Return on average stockholders' equity 9.89 12.02 Return on average tangible stockholders' equity 23.93 30.55 Interest rate spread 3.16 3.39 Net interest margin 3.31 3.49 Efficiency ratio 43.47 30.59 G&A to average assets 1.53 1.05 Effective tax rate 34.42 37.04 Core loan fundings $ 570,196 $ 544,953 Total loan fundings 609,894 583,184 Loans sold 160,507 2,554 Net Charge-offs (Recoveries) 8 (15) COMMERCIAL CAPITAL BANCORP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (Dollars in Thousands, except per share data) NINE MONTHS ENDED Sept. 30, Sept. 30, 2005 2004 ---------------------------------------------------------------------- Interest Income Loans $ 174,594 $ 92,464 Securities 14,907 17,773 FHLB Stock 3,055 1,951 Fed Funds and Other 227 55 ----------------------- Total Interest Income 192,783 112,243 Interest Expense Deposits 33,587 16,963 FHLB Advances 32,207 17,014 Exchange Balances 3,039 - Junior Subordinated Debentures 6,831 3,235 Other Borrowings 1,594 477 ----------------------- Total Interest Expense 77,258 37,689 ----------------------- Net Interest Income 115,525 74,554 Recapture of Allowance for Loan Losses (8,109) - ----------------------- Net Interest Income after Recapture of Allowance for Loan Losses 123,634 74,554 Noninterest Income Loan Related Fees 3,957 3,603 Retail Banking Fees 1,599 801 Mortgage Banking Fees 285 444 1031 Exchange Fees 3,340 - Gain on Sale of Loans 4,895 214 Gain on Sale of Securities - 2,152 Other Income 4,005 1,183 ----------------------- Total Noninterest Income 18,081 8,397 Noninterest Expenses Compensation and Benefits 23,105 11,810 Non-Cash Stock Compensation 1,499 87 Occupancy and Equipment 6,431 3,205 Marketing 1,666 1,103 Technology 2,004 837 Professional and Consulting 3,674 780 Insurance Premiums and Assessment Costs 1,745 1,117 Merger-Related - 914 Recapture of Reserve for Unfunded Commitments (1,434) - Other Expenses 9,098 3,426 ----------------------- Total G&A Expenses 47,788 23,279 Early Extinguishment of Debt - 1,204 Amortization of Core Deposit Intangible 488 261 ----------------------- Total Noninterest Expenses 48,276 24,744 ----------------------- Income Before Taxes 93,439 58,207 Income Tax Expense 34,191 22,178 ----------------------- Net Income $ 59,248 $ 36,029 ======================= Operating Data NINE MONTHS ENDED Performance Ratios and Other Data: Sept. 30, Sept. 30, 2005 2004 ----------------------- Earnings per share -- Basic $ 1.08 $ 0.90 Earnings per share -- Diluted 1.03 0.84 Weighted average shares outstanding -- Basic 55,085,899 40,173,889 Weighted average shares outstanding -- Diluted 57,456,826 42,794,098 Return on average assets 1.52% 1.53% Return on average tangible assets 1.64 1.61 Return on average stockholders' equity 11.93 15.05 Return on average tangible stockholders' equity 28.75 30.95 Interest rate spread 3.13 3.31 Net interest margin 3.29 3.42 Efficiency ratio 35.77 28.06 G&A to average assets 1.22 0.99 Effective tax rate 36.59 38.10 Core loan fundings $1,764,628 $1,193,972 Total loan fundings 1,842,433 1,309,246 Loans sold 702,494 15,852 Net Charge-offs (Recoveries) 3 (19) COMMERCIAL CAPITAL BANCORP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Dollars in Thousands, except per share data) Sept. 30, June 30, Mar. 31, 2005 2005 2005 ---------------------------------------------------------------------- ASSETS ------------------------------------- Cash and Cash Equivalents $ 69,112 $ 33,812 $ 78,775 Securities MBS -- Available For Sale 408,338 444,456 464,689 Other Investments -- Available For Sale - - - --------------------------------- Total Securities 408,338 444,456 464,689 FHLB Stock 84,314 98,943 97,007 Loans Held for Investment Single Family 246,400 196,605 209,480 Multi-family 2,897,778 2,807,503 2,633,004 Commercial Real Estate 534,599 518,106 440,088 Construction 186,583 190,302 225,650 Land 48,414 43,946 50,182 --------------------------------- Total Real Estate Loans 3,913,774 3,756,462 3,558,404 Business and Other Loans 18,085 18,723 19,364 --------------------------------- Total Loans Held for Investment 3,931,859 3,775,185 3,577,768 Net Deferred Fees, Premiums and Discounts 319 (1,815) (4,798) Allowance for Loan Losses (28,723) (28,731) (28,743) --------------------------------- Total Loans Held for Investment, Net 3,903,455 3,744,639 3,544,227 Loans Held for Sale 165,760 304,723 612,549 --------------------------------- Total Loans 4,069,215 4,049,362 4,156,776 Fixed Assets -- Net 16,624 16,905 16,419 Foreclosed Assets - - - Accrued Interest Receivable 19,652 18,872 19,374 Goodwill 394,080 394,080 377,726 Core Deposit Intangible 5,414 5,576 5,739 Bank-Owned Life Insurance 93,290 47,525 47,081 Affordable Housing Investments 33,956 34,877 35,798 Other Assets 41,664 35,593 33,961 ---------------------------------------------------------------------- TOTAL ASSETS $5,235,659 $5,180,001 $5,333,345 ====================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------- Deposits Demand Deposits -- Noninterest- Bearing $ 140,185 $ 127,300 $ 110,741 Demand Deposits -- Interest- Bearing 74,063 74,941 78,611 Money Market Checking 212,637 243,337 316,639 Money Market Savings 438,313 313,158 195,875 Savings 173,481 218,573 281,766 --------------------------------- Total Transaction Deposits 1,038,679 977,309 983,632 Retail Time Deposits 1,001,281 939,410 933,209 Broker Time Deposits 55,845 115,895 115,199 --------------------------------- Total Time Deposits 1,057,126 1,055,305 1,048,408 --------------------------------- Total Deposits 2,095,805 2,032,614 2,032,040 Borrowings FHLB Advances 1,510,917 1,521,028 2,015,338 Exchange Balances 679,526 685,551 370,202 Junior Subordinated Debentures 150,107 150,253 150,398 Other Borrowings 69,000 65,000 61,000 --------------------------------- Total Borrowings 2,409,550 2,421,832 2,596,938 Other Liabilities 49,578 57,098 51,589 ---------------------------------------------------------------------- TOTAL LIABILITIES 4,554,933 4,511,544 4,680,567 STOCKHOLDERS' EQUITY 680,726 668,457 652,778 ---------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,235,659 $5,180,001 $5,333,345 ====================================================================== Operating Data Performance Ratios and Other Data: Sept. 30, June 30, Mar. 31, 2005 2005 2005 --------------------------------- Equity to assets at end of period 13.00% 12.90% 12.24% Tangible equity to assets at end of period 5.37 5.19 5.05 Tangible equity to tangible assets at end of period 5.82 5.62 5.44 Nonperforming assets $ 8,935 $ 12,098 $ 6,475 Nonperforming assets to total assets 0.17% 0.23% 0.12% Allowance for loan losses to loans held for investment at end of period 0.73 0.76 0.80 Allowance for loan losses to nonaccrual loans 321 237 444 Per Share Data Common shares outstanding at end of period 55,640,363 55,388,061 55,416,348 Book value per share $ 12.23 $ 12.07 $ 11.78 Tangible book value per share 5.05 4.85 4.86 Dec. 31, Sept. 30, 2004 2004 ----------------------------------------------------------- ASSETS ------------------------------------- Cash and Cash Equivalents $ 16,961 $ 20,445 Securities MBS -- Available For Sale 491,265 486,120 Other Investments -- Available For Sale - 100 ---------------------- Total Securities 491,265 486,220 FHLB Stock 96,046 86,147 Loans Held for Investment Single Family 841,818 957,825 Multi-family 2,396,788 2,235,427 Commercial Real Estate 420,015 435,075 Construction 225,058 213,656 Land 56,308 55,786 ---------------------- Total Real Estate Loans 3,939,987 3,897,769 Business and Other Loans 16,360 13,399 ---------------------- Total Loans Held for Investment 3,956,347 3,911,168 Net Deferred Fees, Premiums and Discounts (5,708) (11,740) Allowance for Loan Losses (36,835) (36,846) ---------------------- Total Loans Held for Investment, Net 3,913,804 3,862,582 Loans Held for Sale 976 17,620 ---------------------- Total Loans 3,914,780 3,880,202 Fixed Assets -- Net 10,318 9,989 Foreclosed Assets - - Accrued Interest Receivable 17,120 16,819 Goodwill 357,367 357,367 Core Deposit Intangible 5,902 6,105 Bank-Owned Life Insurance 46,277 46,270 Affordable Housing Investments 36,719 17,261 Other Assets 31,169 39,951 ----------------------------------------------------------- TOTAL ASSETS $5,023,924 $4,966,776 =========================================================== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------- Deposits Demand Deposits -- Noninterest- Bearing $ 97,931 $ 92,950 Demand Deposits -- Interest- Bearing 78,003 80,267 Money Market Checking 473,344 419,760 Money Market Savings 245,306 298,165 Savings 336,474 293,905 ---------------------- Total Transaction Deposits 1,231,058 1,185,047 Retail Time Deposits 932,562 1,040,634 Broker Time Deposits 93,161 72,961 ---------------------- Total Time Deposits 1,025,723 1,113,595 ---------------------- Total Deposits 2,256,781 2,298,642 Borrowings FHLB Advances 1,856,349 1,831,798 Exchange Balances - - Junior Subordinated Debentures 135,079 135,225 Other Borrowings 101,000 57,000 ---------------------- Total Borrowings 2,092,428 2,024,023 Other Liabilities 49,499 35,403 ----------------------------------------------------------- TOTAL LIABILITIES 4,398,708 4,358,068 STOCKHOLDERS' EQUITY 625,216 608,708 ----------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,023,924 $4,966,776 =========================================================== Operating Data Performance Ratios and Other Data: Dec. 31, Sept. 30, 2004 2004 ---------------------- Equity to assets at end of period 12.44% 12.26% Tangible equity to assets at end of period 5.21 4.94 Tangible equity to tangible assets at end of period 5.62 5.33 Nonperforming assets $ 6,601 $ 5,095 Nonperforming assets to total assets 0.13% 0.10% Allowance for loan losses to loans held for investment at end of period 0.93 0.94 Allowance for loan losses to nonaccrual loans 558 723 Per Share Data Common shares outstanding at end of period 54,519,579 54,361,762 Book value per share $11.47 $11.20 Tangible book value per share 4.80 4.51 COMMERCIAL CAPITAL BANCORP, INC. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (Dollars in Thousands, except per share data) THREE MONTHS ENDED Sept. 30, June 30, Mar. 31, 2005 2005 2005 ---------------------------------------------------------------------- Interest Income Loans $ 60,148 $ 58,540 $ 55,905 Securities 4,698 4,990 5,219 FHLB Stock 935 1,086 1,034 Fed Funds and Other 83 62 83 --------------------------------- Total Interest Income 65,864 64,678 62,241 Interest Expense Deposits 12,852 10,861 9,874 FHLB Advances 10,139 10,923 11,145 Exchange Balances 1,552 1,147 341 Junior Subordinated Debentures 2,481 2,307 2,043 Other Borrowings 575 515 504 --------------------------------- Total Interest Expense 27,599 25,753 23,907 --------------------------------- Net Interest Income 38,265 38,925 38,334 Recapture of Allowance for Loan Losses - - (8,109) --------------------------------- Net Interest Income after Recapture of Allowance for Loan Losses 38,265 38,925 46,443 Noninterest Income Loan Related Fees 1,380 1,519 1,058 Retail Banking Fees 558 509 531 Mortgage Banking Fees 136 108 40 1031 Exchange Fees 1,620 1,347 374 Gain on Sale of Loans 1,494 2,757 645 Gain on Sale of Securities - - - Other Income 2,246 658 1,100 --------------------------------- Total Noninterest Income 7,434 6,898 3,748 Noninterest Expenses Compensation and Benefits 9,251 7,235 6,619 Non-Cash Stock Compensation 865 393 241 Occupancy and Equipment 2,219 2,052 2,159 Marketing 393 619 654 Technology 746 646 612 Professional and Consulting 2,482 694 498 Insurance Premiums and Assessment Costs 602 574 568 Merger-Related - - - Provision (Recapture of Reserve) for Unfunded Commitments 56 - (1,490) Other Expenses 3,251 3,055 2,793 --------------------------------- Total G&A Expenses 19,865 15,268 12,654 Early Extinguishment of Debt - - - Amortization of Core Deposit Intangible 163 162 163 --------------------------------- Total Noninterest Expenses 20,028 15,430 12,817 --------------------------------- Income Before Taxes 25,671 30,393 37,374 Income Tax Expense 8,835 11,068 14,287 --------------------------------- Net Income $ 16,836 $ 19,325 $ 23,087 ================================= Operating Data THREE MONTHS ENDED Performance Ratios and Other Data: Sept. 30, June 30, Mar. 31, 2005 2005 2005 --------------------------------- Earnings per share -- Basic $ 0.30 $ 0.35 $ 0.42 Earnings per share -- Diluted 0.29 0.34 0.40 Weighted average shares outstanding -- Basic 55,244,376 55,186,788 54,821,891 Weighted average shares outstanding -- Diluted 57,565,159 57,522,870 57,277,806 Return on average assets 1.30% 1.47% 1.78% Return on average tangible assets 1.41 1.59 1.92 Return on average stockholders' equity 9.89 11.62 14.41 Return on average tangible stockholders' equity 23.93 28.11 34.49 Interest rate spread 3.16 3.12 3.10 Net interest margin 3.31 3.28 3.27 Efficiency ratio 43.47 33.32 30.07 G&A to average assets 1.53 1.16 0.98 Effective tax rate 34.42 36.42 38.23 Core loan fundings $ 570,196 $ 599,303 $ 595,129 Total loan fundings 609,894 624,715 607,824 Loans sold 160,507 386,144 155,843 Net Charge-offs (Recoveries) 8 12 (17) Dec. 31, Sept. 30, 2004 2004 ----------------------------------------------------------- Interest Income Loans $ 54,221 $ 50,777 Securities 5,285 5,301 FHLB Stock 860 891 Fed Funds and Other 27 18 ---------------------- Total Interest Income 60,393 56,987 Interest Expense Deposits 9,174 9,060 FHLB Advances 10,717 8,345 Exchange Balances - - Junior Subordinated Debentures 1,770 1,611 Other Borrowings 264 94 ---------------------- Total Interest Expense 21,925 19,110 ---------------------- Net Interest Income 38,468 37,877 Recapture of Allowance for Loan Losses - - ---------------------- Net Interest Income after Recapture of Allowance for Loan Losses 38,468 37,877 Noninterest Income Loan Related Fees 1,591 2,217 Retail Banking Fees 546 588 Mortgage Banking Fees 122 137 1031 Exchange Fees - - Gain on Sale of Loans 3,809 72 Gain on Sale of Securities - - Other Income 622 601 ---------------------- Total Noninterest Income 6,690 3,615 Noninterest Expenses Compensation and Benefits 6,120 6,148 Non-Cash Stock Compensation 29 29 Occupancy and Equipment 2,096 2,131 Marketing 498 421 Technology 538 496 Professional and Consulting 440 370 Insurance Premiums and Assessment Costs 579 582 Merger-Related 282 494 Provision (Recapture of Reserve) for Unfunded Commitments (416) - Other Expenses 2,539 2,023 ---------------------- Total G&A Expenses 12,705 12,694 Early Extinguishment of Debt - - Amortization of Core Deposit Intangible 203 203 ---------------------- Total Noninterest Expenses 12,908 12,897 ---------------------- Income Before Taxes 32,250 28,595 Income Tax Expense 12,016 10,591 ---------------------- Net Income $ 20,234 $ 18,004 ====================== Operating Data Performance Ratios and Other Data: Dec. 31, Sept. 30, 2004 2004 ---------------------- Earnings per share -- Basic $ 0.37 $ 0.34 Earnings per share -- Diluted 0.36 0.32 Weighted average shares outstanding -- Basic 54,399,694 53,625,568 Weighted average shares outstanding -- Diluted 56,947,525 56,824,595 Return on average assets 1.61% 1.50% Return on average tangible assets 1.73 1.62 Return on average stockholders' equity 13.06 12.02 Return on average tangible stockholders' equity 31.55 30.55 Interest rate spread 3.26 3.39 Net interest margin 3.38 3.49 Efficiency ratio 28.13 30.59 G&A to average assets 1.01 1.05 Effective tax rate 37.26 37.04 Core loan fundings $ 495,730 $ 544,953 Total loan fundings 540,783 583,184 Loans sold 166,257 2,554 Net Charge-offs (Recoveries) 11 (15) COMMERCIAL CAPITAL BANCORP, INC. Average Balances, Net Interest Income, Yields Earned and Rates Paid (Dollars in Thousands) THREE MONTHS ENDED SEPTEMBER 30, --------------------------------- 2005 --------------------------------- Average Average Balance Interest Yield/Cost --------------------------------- Interest-Earning Assets: Total Loans(1) $4,093,233 $ 60,148 5.88% Securities(2) 428,419 4,698 4.39 FHLB Stock 88,407 935 4.23 Cash and Cash Equivalents(3) 9,596 83 3.46 ---------------------- Total Interest-Earning Assets 4,619,655 65,864 5.70 Noninterest-Earning Assets 570,882 ----------- Total Assets $5,190,537 =========== Interest-Bearing Liabilities: Deposits: Transaction Accounts(4) $ 877,634 4,795 2.17 Certificates of Deposits 1,056,302 8,057 3.03 ---------------------- Total Deposits 1,933,936 12,852 2.64 FHLB Advances 1,469,112 10,139 2.74 Exchange Balances 700,793 1,552 0.88 Junior Subordinated Debentures 150,203 2,481 6.55 Other Borrowings (5) 64,893 575 3.52 ---------------------- Total Interest-Bearing Liabilities 4,318,937 27,599 2.54 ----------- Noninterest-Bearing Deposits 138,935 Other Noninterest-Bearing Liabilities 51,638 ----------- Total Liabilities 4,509,510 Stockholders' Equity 681,027 ----------- Total Liabilities and Stockholders' Equity $5,190,537 =========== Net Interest-Earning Assets $ 300,718 =========== Net Interest Income/Interest Rate Spread $ 38,265 3.16% ====================== Net Interest Margin 3.31% =========== 2004 --------------------------------- Average Average Balance Interest Yield/Cost --------------------------------- Interest-Earning Assets: Total Loans(1) $3,755,796 $ 50,777 5.41% Securities(2) 494,957 5,301 4.28 FHLB Stock 85,241 891 4.18 Cash and Cash Equivalents(3) 3,750 18 1.92 ---------------------- Total Interest-Earning Assets 4,339,744 56,987 5.25 Noninterest-Earning Assets 474,926 ----------- Total Assets $4,814,670 =========== Interest-Bearing Liabilities: Deposits: Transaction Accounts(4) $1,122,315 4,559 1.62 Certificates of Deposits 1,176,655 4,501 1.52 ---------------------- Total Deposits 2,298,970 9,060 1.57 FHLB Advances 1,621,709 8,345 2.05 Exchange Balances - - - Junior Subordinated Debentures 135,321 1,611 4.74 Other Borrowings (5) 23,424 94 1.60 ---------------------- Total Interest-Bearing Liabilities 4,079,424 19,110 1.86 ----------- Noninterest-Bearing Deposits 101,268 Other Noninterest-Bearing Liabilities 34,630 ----------- Total Liabilities 4,215,322 Stockholders' Equity 599,348 ----------- Total Liabilities and Stockholders' Equity $4,814,670 =========== Net Interest-Earning Assets $ 260,320 =========== Net Interest Income/Interest Rate Spread $ 37,877 3.39% ====================== Net Interest Margin 3.49% =========== ---------------------------------------------------------------------- (1) The average balance of loans receivable includes loans held for sale and is presented without reduction for the allowance for loan losses. (2) Consists of mortgage-backed securities and U.S. government securities which are classified as available-for-sale, excluding the unrealized gains or losses on these securities. (3) Consists of cash in interest-earning accounts and federal funds sold. (4) Consists of savings, money market accounts and other interest-bearing deposits. (5) Consists of securities sold under agreements to repurchase, federal funds purchased, warehouse line of credit and other short-term borrowings. COMMERCIAL CAPITAL BANCORP, INC. Average Balances, Net Interest Income, Yields Earned and Rates Paid (Dollars in Thousands) NINE MONTHS ENDED SEPTEMBER 30, --------------------------------- 2005 --------------------------------- Average Average Balance Interest Yield/Cost --------------------------------- Interest-Earning Assets: Total Loans(1) $4,121,876 $ 174,594 5.65% Securities(2) 455,450 14,907 4.36 FHLB Stock 94,427 3,055 4.31 Cash and Cash Equivalents(3) 10,934 227 2.77 ---------------------- Total Interest-Earning Assets 4,682,687 192,783 5.49 Noninterest-Earning Assets 529,465 ----------- Total Assets $5,212,152 =========== Interest-Bearing Liabilities: Deposits: Transaction Accounts(4) $ 910,708 12,925 1.90 Certificates of Deposits 1,049,009 20,662 2.63 ---------------------- Total Deposits 1,959,717 33,587 2.29 FHLB Advances 1,716,259 32,207 2.51 Exchange Balances 476,270 3,039 0.85 Junior Subordinated Debentures 148,535 6,831 6.15 Other Borrowings (5) 71,814 1,594 2.97 ---------------------- Total Interest-Bearing Liabilities 4,372,595 77,258 2.36 ----------- Noninterest-Bearing Deposits 125,376 Other Noninterest-Bearing Liabilities 51,775 ----------- Total Liabilities 4,549,746 Stockholders' Equity 662,406 ----------- Total Liabilities and Stockholders' Equity $5,212,152 =========== Net Interest-Earning Assets $ 310,092 =========== Net Interest Income/Interest Rate Spread $ 115,525 3.13% ====================== Net Interest Margin 3.29% =========== 2004 --------------------------------- Average Average Balance Interest Yield/Cost --------------------------------- Interest-Earning Assets: Total Loans(1) $2,284,326 $ 92,464 5.40% Securities(2) 552,685 17,773 4.29 FHLB Stock 63,203 1,951 4.12 Cash and Cash Equivalents(3) 5,979 55 1.23 ---------------------- Total Interest-Earning Assets 2,906,193 112,243 5.15 Noninterest-Earning Assets 241,273 ----------- Total Assets $3,147,466 =========== Interest-Bearing Liabilities: Deposits: Transaction Accounts(4) $ 729,263 9,330 1.71 Certificates of Deposits 659,634 7,633 1.55 ---------------------- Total Deposits 1,388,897 16,963 1.63 FHLB Advances 1,214,498 17,014 1.87 Exchange Balances - - - Junior Subordinated Debentures 91,359 3,235 4.73 Other Borrowings (5) 48,533 477 1.31 ---------------------- Total Interest-Bearing Liabilities 2,743,287 37,689 1.84 ----------- Noninterest-Bearing Deposits 62,837 Other Noninterest-Bearing Liabilities 22,095 ----------- Total Liabilities 2,828,219 Stockholders' Equity 319,247 ----------- Total Liabilities and Stockholders' Equity $3,147,466 =========== Net Interest-Earning Assets $ 162,906 =========== Net Interest Income/Interest Rate Spread $ 74,554 3.31% ====================== Net Interest Margin 3.42% =========== ---------------------------------------------------------------------- (1) The average balance of loans receivable includes loans held for sale and is presented without reduction for the allowance for loan losses. (2) Consists of mortgage-backed securities and U.S. government securities which are classified as available-for-sale, excluding the unrealized gains or losses on these securities. (3) Consists of cash in interest-earning accounts and federal funds sold. (4) Consists of savings, money market accounts and other interest-bearing deposits. (5) Consists of securities sold under agreements to repurchase, federal funds purchased, warehouse line of credit and other short-term borrowings. COMMERCIAL CAPITAL BANCORP, INC. Reconciliation of Non-GAAP Financial Measures (Dollars in Thousands, except per share data) The following tables provide a reconciliation of the Company's reported net interest margin and net interest spread compared to adjusted net interest margin and net interest spread excluding the net effect of the amortization or accretion of premiums or discounts resulting from the purchase accounting adjustments due to the Hawthorne acquisition: Excluding Premium/Discount Q3 2005 As Reported Effect --------------------------------- ------------------ Average Avg. Average Balance Interest Yield/Cost Balance Interest --------------------------------- ------------------ Total Interest- Earning Assets $4,619,655 $ 65,864 5.70% $ 3,830 $ (756) Total Interest- Bearing Liabilities 4,318,937 27,599 2.54% (3,205) 347 ----------- -------- Net Interest Income/Interest Rate Spread $ 38,265 3.16% $(1,103) Net Interest Margin 3.31% Excluding Premium/Discount Q2 2005 As Reported Effect --------------------------------- ------------------ Average Avg. Average Balance Interest Yield/Cost Balance Interest --------------------------------- ------------------ Total Interest- Earning Assets $4,740,920 $ 64,678 5.46% $ 4,617 $ (915) Total Interest- Bearing Liabilities 4,418,099 25,753 2.34% (3,600) 417 ----------- -------- Net Interest Income/Interest Rate Spread $ 38,925 3.12% $(1,332) Net Interest Margin 3.28% Excluding Premium/Discount Q3 2004 As Reported Effect --------------------------------- ------------------ Average Avg. Average Balance Interest Yield/Cost Balance Interest --------------------------------- ------------------ Total Interest- Earning Assets $4,339,744 $ 56,987 5.25% $ 13,660 $(1,434) Total Interest- Bearing Liabilities 4,079,424 19,110 1.86% (6,103) 1,295 ----------- -------- Net Interest Income/Interest Rate Spread $ 37,877 3.39% $(2,729) Net Interest Margin 3.49% Q3 2005 Adjusted --------------------------------- Average Avg. Balance Interest Yield/Cost --------------------------------- Total Interest- Earning Assets $4,623,485 $ 65,108 5.63% Total Interest- Bearing Liabilities $4,315,732 $ 27,946 2.57% ----------- Net Interest Income/Interest Rate Spread $37,162 3.06% Net Interest Margin 3.22% Q2 2005 Adjusted --------------------------------- Average Avg. Balance Interest Yield/Cost --------------------------------- Total Interest- Earning Assets $4,745,537 $ 63,763 5.37% Total Interest- Bearing Liabilities $4,414,499 $ 26,170 2.38% ----------- Net Interest Income/Interest Rate Spread $ 37,593 2.99% Net Interest Margin 3.17% Q3 2004 Adjusted --------------------------------- Average Interest Avg. Balance Yield/Cost --------------------------------- Total Interest- Earning Assets $4,353,404 $ 55,553 5.10% Total Interest- Bearing Liabilities 4,073,321 20,405 1.99% ----------- Net Interest Income/Interest Rate Spread $ 35,148 3.11% Net Interest Margin 3.23% The following tables provide a reconciliation of the Company's net income and total general and administrative expenses excluding the effect of the expenses related to the Commercial Banking Division. Three Months Ended Net Income Sept. 30, 2005 ------------------- Net income -- as reported $ 16,836 Adjustments related to the Commercial Banking Division: Add: Reversal of compensation expenses 1,183 Add: Reversal of professional expenses 1,722 Add: Reversal of other operating expenses 33 Less: Tax effect (42%) (1,234) ------------------- Net income -- Non-GAAP $ 18,540 =================== Three Months Ended Total General and Administrative Expense Sept. 30, 2005 ------------------- Total general and administrative expense -- as reported $ 19,865 Adjustments related to the Commercial Banking Division: Less: Compensation expenses (1,183) Less: Professional expenses (1,722) Less: Other operating expenses (33) ------------------- Total general and administrative expense -- Non-GAAP $ 16,927 =================== Selected Financial Highlights: Three Months Ended Three Months Ended Sept. 30, 2005 Sept. 30, 2005 Non-GAAP GAAP ------------------- ------------------ Basic EPS $ 0.34 $ 0.30 Diluted EPS 0.32 0.29 Return on Average Assets(1) 1.43% 1.30% Return on Tangible Assets(1) 1.55 1.41 Return on Average Equity(1) 10.89 9.89 Return on Average Tangible Equity(1) 26.35 23.93 Efficiency Ratio 37.04 43.47 G&A to Average Assets(1) 1.30 1.53 (1) Average asset and equity balances were not adjusted for purposes of calculating these Non-GAAP financial ratios COMMERCIAL CAPITAL BANK, FSB Selected Financial Data (Dollars in Thousands) Sept. 30, 2005 June 30, 2005 ---------------------------------------------------------------------- ASSETS ---------------------------------------------------------------------- Cash and Cash Equivalents $ 67,014 $ 29,675 Securities 406,748 442,782 FHLB Stock 84,314 98,943 Loans Held For Investment Single Family 246,400 196,605 Multi-family 2,894,484 2,804,188 Commercial Real Estate 534,599 518,106 Construction 186,583 190,302 Land 48,414 43,946 ------------------------------- Total Real Estate Loans 3,910,480 3,753,147 Business & Other Loans 17,972 18,610 ------------------------------- Total Loans Held for Investment 3,928,452 3,771,757 Net Deferred Fees, Premiums and Discounts 1,810 (25) Allowance for Loan Losses (28,723) (28,731) ------------------------------- Total Loans Held for Investment, Net 3,901,539 3,743,001 Loans Held For Sale 164,794 303,754 ------------------------------- Total Loans 4,066,333 4,046,755 Other Assets 550,212 502,369 ---------------------------------------------------------------------- TOTAL ASSETS $ 5,174,621 $ 5,120,524 ====================================================================== LIABILITIES AND STOCKHOLDER'S EQUITY ---------------------------------------------------------------------- Deposits Demand Deposits -- Noninterest- Bearing $ 176,013 $ 222,143 Demand Deposits -- Interest- Bearing 74,063 74,941 Money Market Checking 595,051 600,640 Money Market Savings 680,392 532,838 Savings 173,573 218,665 ------------------------------- Total Transaction Deposits 1,699,092 1,649,227 Total Time Deposits 1,057,126 1,055,305 ------------------------------- Total Deposits 2,756,218 2,704,532 Borrowings 1,579,917 1,586,028 Other Liabilities 55,408 58,963 ---------------------------------------------------------------------- TOTAL LIABILITIES 4,391,543 4,349,523 STOCKHOLDER'S EQUITY 783,078 771,001 ---------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 5,174,621 $ 5,120,524 ====================================================================== *T