SAN DIEGO, Jan. 17, 2007 (PRIME NEWSWIRE) -- 1st Pacific Bank of California (OTCBB:FPBS) today announced fiscal year 2006 net income of $3.20 million, an increase of 36.3 percent above the $2.35 million reported for the prior fiscal year. Diluted earnings per share were $0.76 compared with $0.56 in 2005, an increase of 35.7 percent. For the fourth quarter of 2006, earnings were $815,000, or $0.19 per diluted share, up 12.4 percent and 11.8 percent, respectively, above 2005 fourth quarter earnings of $725,000, and $0.17 per diluted share. Full year and fourth quarter 2006 results reflect strong loan growth, exceptional asset quality and disciplined control of expenses.
Highlights for the full-year and fourth quarter 2006 include:
* Assets increased 19.9 percent to $318 million at year-end, surpassing the $300 million mark for first time in 1st Pacific's history. * Loan growth was $44.9 million, up 19.5 percent, with the fourth quarter accounting for $19.7 million of the year's total, up 7.7 percent from third quarter. * A tradition of exceptional asset quality. There were zero non-performing loans, zero OREO, and merely $2,000 in net charge-offs reported for the fiscal year 2006. * Growth in net interest income was 21.3 percent year-over-year, to $15.2 million, primarily from 20.3 percent growth in earning assets. * The 2006 net interest margin increased five basis points for the year, to 5.61 percent; however, the fourth quarter margin narrowed 41 basis points from the previous quarter, to 5.20 percent, where it is expected stabilize near-term. * Growth of operating expenses, up 16.4 percent year-over-year, has been disciplined; both asset and revenue growth have outpaced growth of non-interest expense in 2006 despite the expenses associated with the addition of a new branch this past year. * Formation of a bank holding company -- 1st Pacific Bancorp. The Bank's board of directors, its regulators and a majority of its shareholders have approved the reorganization; finalization should occur shortly.
Vincent Siciliano, president and CEO of 1st Pacific Bank, commented, "Our record earnings performance this past year highlights our success in attracting quality relationships within our San Diego footprint. Although loan growth has moderated to a more sustainable level, our loan portfolio, which is heavily weighted toward construction and commercial real estate lending, continues to perform well. Funding our strong loan growth continues to be our primary challenge since we serve a predominantly commercial customer base.
"We have surpassed $300 million in assets this quarter, and we believe we have achieved a level of maturity and size to undertake the next step in our corporate evolution - the formation of a bank holding company, 1st Pacific Bancorp. Our directors, regulators and shareholders have already approved the reorganization, and we anticipate finalization shortly."
Total revenue, consisting of net interest income and non-interest income, was $15.8 million for the fiscal year 2006, an increase of 20.8 percent above the $13.1 million reported for the fiscal year 2005. Net interest income for 2006 increased 21.3 percent to $15.2 million, reflecting a 20.3 percent increase in average earning assets and a net interest margin of 5.61 percent, up six basis points for the year. For the fourth quarter of 2006, net interest income increased 7.7 percent compared with the prior-year fourth quarter; average earning asset growth of 18.2 percent was partially offset by a 51 basis point decline in the net interest margin to 5.20 percent. Compared with the third quarter of 2006, the fourth quarter margin declined 41 basis points. Mr. Siciliano added, "While rising deposit costs have contributed to this compression, our margin appears to have stabilized and should remain relatively level through the next few quarters."
Non-interest income for 2006 was $538,000 compared with $491,000 last year, an increase of 9.6 percent. For the fourth quarter of 2006, non-interest income declined 28.0 percent from the prior-year quarter to $134,000, due mainly to lower gains on loan sales.
Expenses continue to be well-controlled, declining relative to 1st Pacific's growing asset base. Noninterest expense was $9.9 million for the fiscal year 2006, an increase of $1.4 million or 16.4 percent, above 2005. Salaries and benefits expense increased by $1.0 million, or 19.8 percent above prior-year levels, to $6.1 million; the increase reflects the addition of eight full-time equivalent employees, bringing the total to 77, including five employees added to staff the new office in El Cajon. Noninterest expense improved from 3.65 percent of average assets for 2005 to 3.54 percent for the fiscal year 2006 as 1st Pacific continued to leverage its infrastructure. The efficiency ratio also continues to improve, declining to 62.9 percent for the current year compared with 65.3 percent 2005.
For the fourth quarter of 2006, non-interest expense increased a modest 6.9 percent from year-earlier levels, to $2.6 million. This spending control reflects favorably in the annualized fourth quarter non-interest expense as a percent of average assets, which declined 35 basis points to 3.43 percent for the fourth quarter.
Asset quality remains exceptional. Nonperforming assets were zero at December 31, 2006, compared with $1.1 million of non-performing loans twelve months ago; net charge-offs were a total of $2,000 this year and $8,000 last year. At December 31, 2006, the loan loss reserve was $3.3 million, or 1.18 percent of loans.
At December 31, 2006, total assets were $318.4 million, an increase of 19.9 percent above the year-earlier balance; for the same 12-month period, loan growth was $44.9 million or 19.5 percent, reaching $275.3 million at year-end. Loans increased by $19.7 million in the fourth quarter of 2006, up 7.7 percent, primarily from a slower pace of fourth quarter payoffs of construction loans.
At year-end 2006, construction and land loans were $116.4 million, up 22.6 percent year-over-year; however, as a percent of the total loan portfolio, the shift was minimal: 42.3 percent in 2006 compared with 41.2 percent in 2005. In fact, there was very little change in the overall composition of 1st Pacific's loan portfolio during the course of 2006; real estate loans, mainly commercial, grew 24.6 percent, ending the year at 29.5 percent of the portfolio, while C&I loans, the third biggest loan category at 19.2 percent of total loans, grew $8.8 million, or 20.1 percent.
Deposits were $261.8 million at December 31, 2006, up $24.6 million or 10.4 percent from twelve months ago. "Our need to rely on highly competitive time deposits to fund our strong loan growth and the catch up of deposit rates have contributed to the erosion of our margin," Mr. Siciliano explained. "During the fourth quarter, however, we ran a successful local advertising campaign that attracted over $14 million in money market funds and allowed us to rely less heavily on time deposits."
At December 31, 2006, shareholders' equity was $26.0 million, an increase of $3.7 million, or 16.8 percent from twelve months ago. Equity was 8.15 percent of assets at year-end 2006 compared with 8.37 percent last year. Mr. Siciliano concluded, "We look forward to a continuation of strong loan growth in our market by virtue of our highly effective real estate network, and playing an increasingly larger role in financing the business community of San Diego."
About 1st Pacific Bank of California
1st Pacific Bank, San Diego's leading business bank, offers a full complement of business products and services to meet the financial needs of professional firms, small to mid-sized businesses, their owners and the people who work there. Offices are located in the Golden Triangle area of La Jolla, in the Tri-Cities area of Oceanside, in Mission Valley, in Inland North County, and at its newest office in El Cajon. The bank also operates a loan production office serving the Inland Empire in Murrieta. The bank opened Nov. 17, 2000 after raising $11.5 million in an initial public offering. For additional information, visit the Company's web site: www.1stpacbank.com.
Safe Harbor
This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulation; changes in tax laws; changes in prices, levies and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in the national and local economy; and other factors, including risk factors, referred to from time to time in filings made by 1st Pacific Bank with the Federal Reserve Board. 1st Pacific Bank undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise
1st Pacific Bank of California Fourth Quarter 2006 Results 1st Pacific Bank of California CONSOLIDATED FINANCIAL HIGHLIGHTS (dollars in thousands Quarterly except ----------------------------------------------------- per share 2006 2006 2006 2006 2005 data) 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr ----------------------------------------------------- EARNINGS Net interest income $ 3,809 3,874 3,908 3,652 3,538 Provision for loan losses $ 10 86 169 179 70 Noninterest income $ 134 140 145 120 186 Noninterest expense $ 2,591 2,441 2,477 2,419 2,423 Net income $ 815 873 822 693 725 Basic earnings per share $ 0.21 0.23 0.21 0.18 0.19 Diluted earnings per share $ 0.19 0.21 0.20 0.16 0.17 Average shares outstanding 3,873,532 3,868,396 3,866,992 3,852,399 3,849,540 Average diluted shares outstanding 4,215,993 4,181,556 4,136,256 4,238,811 4,227,819 PERFORMANCE RATIOS Return on average assets 1.08% 1.23% 1.18% 1.08% 1.13% Return on average common equity 12.73% 14.21% 14.05% 12.41% 13.17% Net interest margin (fully tax-equivalent) 5.20% 5.61% 5.81% 5.87% 5.71% Efficiency ratio 65.70% 60.82% 61.13% 64.14% 65.07% CAPITAL Period-ending equity to assets 8.15% 8.46% 8.31% 8.30% 8.37% Book value per share $ 6.67 6.42 6.17 5.96 5.77 ASSET QUALITY Net loan charge-offs (recoveries) $ 1 0 0 1 (2) Allowance for loan losses $ 3,251 3,242 3,156 2,987 2,809 Allowance for losses to total loans 1.18% 1.27% 1.24% 1.21% 1.22% Nonperforming loans $ 0 0 1,011 1,027 1,052 Other real estate owned $ 0 0 0 0 0 Nonperforming assets to total assets 0.00% 0.00% 0.35% 0.37% 0.40% END OF PERIOD BALANCES Total loans $ 275,266 255,560 254,341 247,461 230,382 Total assets $ 318,446 293,530 287,352 277,449 265,582 Deposits $ 261,838 245,011 249,781 235,590 237,208 Shareholders' equity $ 25,962 24,841 23,875 23,037 22,230 Full-time equivalent employees 77 73 75 71 69 AVERAGE BALANCES Total loans $ 266,602 254,315 246,028 234,133 226,672 Earning assets$ 290,730 273,920 269,876 252,305 245,894 Total assets $ 299,530 282,106 278,573 260,654 253,998 Deposits $ 253,378 244,637 247,643 228,813 222,452 Shareholders' equity $ 25,402 24,358 23,456 22,634 21,848 12 Months Year-To-Date (dollars in thousands ---------------------- except per share data) 2006 2005 ---------------------- EARNINGS Net interest income 15,243 12,569 Provision for loan losses 444 553 Noninterest income 538 491 Noninterest expense 9,928 8,532 Net income 3,202 2,350 Basic earnings per share 0.83 0.61 Diluted earnings per share 0.76 0.56 Average shares outstanding 3,865,330 3,840,596 Average diluted shares outstanding 4,193,154 4,183,787 PERFORMANCE RATIOS Return on average assets 1.14% 1.01% Return on average common equity 13.36% 11.28% Net interest margin (fully tax-equivalent) 5.61% 5.56% Efficiency ratio 62.91% 65.32% CAPITAL Period-ending equity to assets 8.15% 8.37% Book value per share 6.67 5.77 ASSET QUALITY Net loan charge-offs (recoveries) 2 8 Allowance for loan losses 3,251 2,809 Allowance for losses to total loans 1.18% 1.22% Nonperforming loans 0 1,052 Other real estate owned 0 0 Nonperforming assets to total assets 0.00% 0.40% END OF PERIOD BALANCES Total loans 275,266 230,382 Total assets 318,446 265,582 Deposits 261,838 237,208 Shareholders' equity 25,962 22,230 Full-time equivalent employees 77 69 AVERAGE BALANCES Total loans 250,369 205,818 Earning assets 271,819 225,913 Total assets 280,328 233,687 Deposits 253,378 222,452 Shareholders' equity 23,962 20,833 1st Pacific Bank of California Fourth Quarter 2006 Results 1st Pacific Bank of California CONSOLIDATED BALANCE SHEETS Dec. 31, 2006 Dec. 31, 2005 ------------- ------------- ASSETS Cash and due from banks $ 9,098,939 $ 5,228,147 Federal funds sold 20,985,000 23,710,000 ------------- ------------- Total cash and cash equivalents 30,083,939 28,938,147 Investment securities available for sale 8,998,338 3,145,621 FRB, FHLB and other equity stock, at cost 2,086,850 1,615,500 Construction & Land 116,389,134 94,912,271 Residential & Comm'l RE 81,130,349 65,122,928 SBA 7a & 504 loans 19,883,247 21,964,919 Commercial loans 52,796,722 43,970,126 Other consumer 5,066,085 4,411,829 ------------- ------------- Total loans and leases 275,265,537 230,382,073 Allowance for loan losses (3,251,002) (2,808,883) ------------- ------------- Total loans and leases, net 272,014,535 227,573,190 Premises and equipment, net 1,604,318 1,592,224 Accrued interest and other assets 3,657,713 2,716,912 ------------- ------------- Total assets $ 318,445,693 $ 265,581,594 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest-bearing demand $ 46,099,641 $ 54,772,554 Interest-bearing checking 13,323,197 14,539,658 Savings and money market 87,783,374 76,319,842 Time deposits 114,632,266 91,576,358 ------------- ------------- Total deposits 261,838,478 237,208,412 Subordinated debentures 5,000,000 5,000,000 Other borrowed money 24,000,000 0 Accrued interest and other liabilities 1,644,853 1,142,820 ------------- ------------- Total liabilities 292,483,331 243,351,232 Shareholders' equity: Common stock and additional paid-in capital 20,741,845 20,261,472 Retained earnings 5,210,116 2,008,341 Accumulated other comprehensive income(loss) 10,401 (39,451) ------------- ------------- Total shareholders' equity 25,962,362 22,230,362 ------------- ------------- Total liabilities and shareholders' equity $ 318,445,693 $ 265,581,594 ============= ============= 1st Pacific Bank of California Fourth Quarter 2006 Results 1st Pacific Bank of California CONSOLIDATED REPORTS OF INCOME THREE MONTHS ENDED TWELVE MONTHS ENDED Dec 31, Dec 31, Dec 31, Dec 31, 2006 2005 2006 2005 ----------- ----------- ----------- ----------- INTEREST INCOME Loans, including fees $ 6,031,359 $ 4,755,847 $22,435,496 $16,021,950 Investment securities 137,925 51,060 374,560 236,334 Federal funds sold 170,458 137,614 649,660 436,525 ----------- ----------- ----------- ----------- Total interest income 6,339,742 4,944,521 23,459,716 16,694,809 ----------- ----------- ----------- ----------- INTEREST EXPENSE Deposits 2,249,222 1,305,333 7,563,110 3,835,281 Subordinated debt and other borrowings 281,452 101,283 653,744 290,039 ----------- ----------- ----------- ----------- Total interest expense 2,530,674 1,406,616 8,216,854 4,125,320 ----------- ----------- ----------- ----------- Net interest income 3,809,068 3,537,905 15,242,862 12,569,489 Provision for loan losses 10,000 70,000 444,000 552,500 ----------- ----------- ----------- ----------- Net interest income after provision for loan losses 3,799,068 3,467,905 14,798,862 12,016,989 NON INTEREST INCOME Service charges, fees and other income 95,565 88,436 395,676 325,244 Brokered loan fees and gains on loan sales 38,492 97,804 142,762 165,963 ----------- ----------- ----------- ----------- Total non interest income 134,057 186,240 538,438 491,207 NON INTEREST EXPENSE Salaries and benefits 1,560,551 1,442,984 6,075,991 5,072,754 Occupancy and equipment 380,241 347,192 1,536,809 1,352,077 Other expense 649,774 633,144 2,315,525 2,106,931 ----------- ----------- ----------- ----------- Total non interest expense 2,590,566 2,423,320 9,928,325 8,531,762 ----------- ----------- ----------- ----------- Income before income tax expense 1,342,559 1,230,825 5,408,975 3,976,434 Income tax expense 527,800 505,700 2,207,200 1,626,300 ----------- ----------- ----------- ----------- Net income $ 814,759 $ 725,125 $ 3,201,775 $ 2,350,134 =========== =========== =========== =========== Basic earnings per share $ 0.21 $ 0.19 $ 0.83 $ 0.61 Diluted earnings per share $ 0.19 $ 0.17 $ 0.76 $ 0.56 Average shares outstanding 3,873,532 3,849,540 3,865,330 3,840,596 Average diluted shares outstanding 4,215,993 4,227,819 4,193,154 4,183,787