SAN DIEGO, July 26, 2007 (PRIME NEWSWIRE) -- 1st Pacific Bancorp (OTCBB:FPBN), the holding company for 1st Pacific Bank of California, today announced second quarter 2007 net income of $664,000, a decrease of 19.2 percent from the $822,000 reported for the prior-year second quarter. Diluted earnings per share were $0.16, a 20.0 percent decline from the per share earnings of $0.20 reported for the second quarter of 2006. Compared with the first quarter of 2007, net income declined 1.2 percent, and was unchanged at $0.16 for both quarters on a diluted per share basis. For the first six months of 2007, net income was $1.34 million, down 11.7 percent from the $1.5 million reported for the 2006 six month period. Diluted per share earnings were $0.32 for the 2007 period and $0.36 for the 2006 period, a decline of 11.1 percent. Year over year, results reflect solid loan growth and disciplined expense control, offset by net interest margin compression.
Highlights for the second quarter of 2007 include:
* Assets increased 8.6 percent to $312.1 million for the twelve-month period ending June 30, 2007; loan growth was $27.9 million, up 11.0 percent. * The net interest margin declined 101 basis points over the past year, to 4.80 percent for the second quarter of 2007. The rate of margin compression has been slowing in recent quarters, with the second quarter margin down 13 basis points from the first quarter of 2007. * One loan in the amount of $4.7 million was downgraded to nonperforming status this quarter in an otherwise pristine loan portfolio. No loss is anticipated. * The Company continued its rigorous control of non-interest expense, which increased 10.6 percent year over year, and was a nominal 1.6 percent higher than first quarter of 2007. * 1st Pacific's acquisition of Landmark National Bank was completed on July 1, 2007. Although not reflected in second quarter results, Landmark will add approximately $100 million in assets and two banking offices in San Diego County to 1st Pacific Bank's operations.
Vincent Siciliano, President and CEO of 1st Pacific Bancorp, commented, "We are seeing some slowdown in residential construction here is San Diego since year-end 2006, and we are adjusting accordingly. For the most part, it is business as usual, but at a lesser pace. Loan growth is still solid, but slower than in previous years, while asset quality remains excellent. Last year we became more selective in our choice of projects, and have seen lower construction and land loan volumes as a result.
"Meanwhile, we have the integration of Landmark well underway. We appointed two senior managers to serve in leadership roles in our new regions, and for the most part, we have achieved our planned personnel savings. We are now a $415 million bank, with a larger lending limit and more calling officers. We have one of the most vibrant and diversified markets in the country, and many opportunities for continued growth."
Total revenue, consisting of net interest income and non-interest income, was $3.94 million for the second quarter of 2007, a decrease of 2.7 percent from the $4.05 million reported for the prior-year second quarter. Net interest income decreased 3.6 percent to $3.77 million, reflecting a 101 basis point decline in net interest margin, to 4.80 percent, partially offset by a 16.6 percent increase in average earning assets. Compared with the first quarter of 2007, the second quarter margin declined 13 basis points.
Non-interest income for the second quarter of 2007 was $176,000 compared with $145,000 for the year-ago quarter, an increase of 21.7 percent, primarily due to an increase in brokered loan fees and gains on loan sales.
Expenses continue to be well controlled. Non-interest expense was $2.7 million for the second quarter of 2007, an increase of $261,000 or 10.6 percent, over the prior-year second quarter. Salaries and benefits rose $67,100, or 4.4 percent, reflecting the addition of one net FTE employee year over year. Other expenses accounted for the largest share of the increase, up $193,900, or 20.2 percent from the second quarter of 2006; part of this increase is related to our holding company, which we organized in January 2007. Holding company expenses were $49,000 for the second quarter of 2007, and $97,000 year to date. FDIC insurance also increased sharply, $47,000 for the quarter and $80,000 year to date compared to $7,000 and $14,000 respectively. Compared with the linked quarter, non-interest expense rose $44,000, or 1.6 percent; the $45,300 decrease in salaries and benefits was offset by an $88,000 increase in other expense. Second quarter headcount increased from the first quarter by five FTE employees, as 1st Pacific hired a few key people to staff the combined organization. The efficiency ratio for the second quarter of 2007 was 69.4 percent, compared with 61.1 percent for the year-ago quarter, due primarily to a lower level of revenues.
Asset quality declined during the second quarter of 2007, primarily from the downgrade of one $4.7 million loan to nonperforming status. The loan supports a multi-unit residential housing project that is completed, with several units either sold or in escrow. Sales are slower than anticipated, and interest reserves have been depleted; no loss of principle is expected. Nonperforming assets were $4.7 million at June 30, 2007, equivalent to 1.51 percent of total assets, compared with $1.0 million, or 0.35 percent of total assets, twelve months ago. At June 30, 2007, the loan loss reserve was $3.4 million, or 1.21 percent of loans.
At June 30, 2007, total assets were $312.1 million, an increase of 8.6 percent above year-ago levels; loans grew $27.9 million, or 11.0 percent, year over year, reaching $282.2 million at quarter-end. 1st Pacific's loan portfolio has become better balanced as construction lending slowed; since year-end 2006, construction and land development loans (C&D) declined by $10.8 million, while commercial term loans grew $17.7 million to replace the runoff of construction loans. By June 30, 2007, C&D loans had declined to 37.4 percent of the loan portfolio from 42.3 percent at year-end. Conversely, commercial term real estate loans grew 21.8 percent during the current six-month period, to $98.8 million. Commercial loans also increased year over year by $14.2 million, or 32.5 percent, to $57.8 million at the end of the 2007 second quarter.
Deposits were $273.2 million at June 30, 2007, up $23.4 million or 9.4 percent from twelve months ago. Money market and savings accounts grew 32.7 percent over the past twelve months and now account for 31.1 percent of 1st Pacific's deposit base, up from 25.6 percent in the year-ago quarter. Noninterest-bearing DDA deposits increased 0.8 percent over the last twelve months to $51,716,519, accounting for 18.9 percent of total deposits. Meanwhile, time deposits declined as a percent of deposits over the past twelve months from, 46.4 percent to 44.7 percent. The average cost of deposits for the quarter was 3.62 percent compared with 3.68 percent in the first quarter of 2007. Deposit levels increased $11.3 million since December 31, 2006, divided between noninterest-bearing DDA deposits (up $5.6 million, or 12 percent) and time deposits (up $7.6 million or 6.1 percent).
At June 30, 2007, shareholders' equity was $27.5 million, an increase of $3.6 million, or 15.1 percent from twelve months ago. Shareholders' equity was 8.80 percent of assets at period-end compared with 8.31 percent the year earlier. Mr. Siciliano concluded, "We continue to manage our business as we always do, seeking quality loans and underwriting them with care. As a result, we have excellent asset quality which has enabled us to absorb significant margin compression. We have slowed our real estate loan growth in response to market conditions, while focusing on increased C&I loan production and core deposit growth. Our acquisition of Landmark Bank positions us as San Diego's largest public local bank, well positioned to meet the financing needs of the Greater San Diego market."
About 1st Pacific Bancorp
1st Pacific Bancorp is the holding company for 1st Pacific Bank of California, San Diego's leading local business bank. The 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. Including its recent acquisition of Landmark National Bank, 1st Pacific Bank has a total of seven banking offices located in San Diego County: one each in the University Towne Center area, in the Tri-Cities area of Oceanside, in Mission Valley, the Inland North County, El Cajon, La Jolla Village and Solana Beach. For additional information, visit the Company's web site at: http://www.1stpacificbank.com.
The 1st Pacific Bancorp logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=3261
Forward-Looking Statements
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 Bancorp with the Federal Reserve Board. 1st Pacific Bancorp undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
1st Pacific Bancorp
Second Quarter 2007 Results
1st Pacific Bancorp
CONSOLIDATED FINANCIAL HIGHLIGHTS
(dollars in Quarterly
thousands ---------------------------------------------------
except per 2007 2007 2006 2006 2006
share data) 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr
---------------------------------------------------
EARNINGS
Net interest
income $ 3,768 3,737 3,809 3,874 3,908
Provision for
loan losses $ 74 77 10 86 169
NonInterest
income $ 176 170 134 140 145
NonInterest
expense $ 2,738 2,694 2,635 2,441 2,477
Net income $ 664 672 789 873 822
Basic
earnings
per share $ 0.17 0.17 0.20 0.23 0.21
Diluted
earnings
per share $ 0.16 0.16 0.19 0.21 0.20
Average
shares
outstanding 3,899,132 3,890,484 3,873,532 3,868,396 3,866,992
Average
diluted
shares
outstanding 4,233,262 4,228,740 4,215,993 4,181,556 4,136,256
PERFORMANCE RATIOS
Return on
average assets 0.83% 0.87% 1.04% 1.23% 1.18%
Return on
average
common
equity 9.84% 10.36% 12.32% 14.21% 14.05%
Net interest
margin
(fully tax-
equivalent) 4.80% 4.93% 5.20% 5.61% 5.81%
Efficiency
ratio 69.43% 68.95% 66.83% 60.82% 61.13%
CAPITAL
Period-ending
equity to
assets 8.80% 8.46% 8.14% 8.46% 8.31%
Book value
per share $ 7.04 6.86 6.67 6.42 6.17
ASSET QUALITY
Net loan
charge-offs
(recoveries) $ (0) (0) 1 0 0
Allowance for
loan losses $ 3,402 3,328 3,251 3,242 3,156
Allowance for
losses to
total loans 1.21% 1.19% 1.18% 1.27% 1.24%
Nonperforming
loans $ 4,724 0 0 0 1,011
Other real
estate owned $ 0 0 0 0 0
Nonperforming
assets to
total assets 1.51% 0.00% 0.00% 0.00% 0.35%
END OF PERIOD
BALANCES
Total Loans $282,249 280,032 275,266 255,560 254,341
Total assets $312,129 315,559 318,465 293,530 287,352
Deposits $273,150 268,793 261,838 245,011 249,781
Shareholders'
equity $ 27,474 26,705 25,936 24,841 23,875
Full-time
equivalent
employees 76 71 77 73 75
AVERAGE
BALANCES
Total Loans $285,352 277,367 266,602 254,315 246,028
Earning Assets $314,564 307,220 290,730 273,920 269,876
Total assets $321,626 314,849 299,530 282,106 278,573
Deposits $264,022 266,117 253,378 244,637 247,643
Shareholders'
equity $ 27,090 26,321 25,389 24,358 23,456
6 Months Year-To-Date
---------------------
2007 2006
---------------------
EARNINGS
Net interest
income 7,505 7,560
Provision for
loan losses 151 348
NonInterest
income 346 264
NonInterest
expense 5,433 4,896
Net income 1,337 1,515
Basic
earnings
per share 0.34 0.39
Diluted
earnings
per share 0.32 0.36
Average
shares
outstanding 3,894,808 3,859,695
Average
diluted
shares
outstanding 4,231,001 4,187,534
PERFORMANCE RATIOS
Return on
average assets 0.85% 1.13%
Return on
average
common
equity 10.10% 13.25%
Net interest
margin
(fully tax-
equivalent) 4.87% 5.84%
Efficiency
ratio 69.19% 62.58%
CAPITAL
Period-ending
equity to
assets 8.80% 8.31%
Book value
per share 7.04 6.17
ASSET QUALITY
Net loan
charge-offs
(recoveries) (0) 0
Allowance for
loan losses 3,402 3,156
Allowance for
losses to
total loans 1.21% 1.24%
Nonperforming
loans 4,724 1,011
Other real
estate owned 0 0
Nonperforming
assets to
total assets 1.51% 0.35%
END OF PERIOD
BALANCES
Total Loans 282,249 254,341
Total assets 312,129 287,352
Deposits 273,150 249,781
Shareholders'
equity 27,474 23,875
Full-time
equivalent
employees 76 75
AVERAGE BALANCES
Total Loans 281,381 240,113
Earning Assets 310,912 261,139
Total assets 318,344 269,663
Deposits 265,064 238,280
Shareholders'
equity 26,705 23,045
1st Pacific Bancorp
Second Quarter 2007 Results
1st Pacific Bancorp
CONSOLIDATED BALANCE SHEETS
Jun 30, Dec 31, Jun 30,
2007 2006 2006
------------ ------------ ------------
ASSETS
Cash and due
from banks $ 6,085,134 $ 9,099,447 $ 7,493,644
Federal funds
sold 10,140,000 20,985,000 12,730,000
--------------------------------------------
Total cash
and cash
equivalents 16,225,134 30,084,447 20,223,644
Investment
securities
available for
sale 8,571,971 8,998,338 9,687,637
FRB, FHLB and
other equity
stock, at cost 2,612,300 2,086,850 1,727,850
Construction & Land 105,574,792 116,389,134 108,682,793
Residential &
Comm'l RE 98,790,861 81,130,349 79,590,893
SBA 7a & 504 Loans 14,060,974 19,883,247 19,355,171
Commercial Loans 57,804,497 52,796,722 43,634,218
Other Consumer 6,018,046 5,066,085 3,077,554
--------------------------------------------
Total loans and
leases 282,249,170 275,265,537 254,340,629
Allowance for Loan
Losses (3,402,102) (3,251,002) (3,156,341)
--------------------------------------------
Total loans and
leases, net 278,847,068 272,014,535 251,184,288
Premises and
Equipment, net 1,938,323 1,604,318 1,693,611
Accrued Interest
and Other Assets 3,934,445 3,676,110 2,834,575
--------------------------------------------
Total Assets $312,129,241 $318,464,598 $287,351,605
============================================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Deposits:
Noninterest-bearing
demand $ 51,716,519 $ 46,099,641 $ 51,318,114
Interest bearing
checking 14,403,979 13,323,197 18,699,984
Savings and Money
Market 84,847,163 87,783,374 63,916,866
Time Deposits 122,182,245 114,632,266 115,846,467
--------------------------------------------
Total Deposits 273,149,906 261,838,478 249,781,431
Subordinated
Debentures 10,155,000 5,000,000 5,000,000
Other borrowed
money 0 24,010,000 7,000,000
Accrued interest
and other
liabilities 1,350,491 1,679,866 1,695,192
--------------------------------------------
Total liabilities 284,655,397 292,528,344 263,476,623
Shareholders' Equity:
Common stock and
additional paid-in
capital 20,918,348 20,741,995 20,412,313
Retained Earnings 6,520,730 5,183,858 3,522,850
Accumulated other
comprehensive
income(loss) 34,766 10,401 (60,181)
--------------------------------------------
Total
shareholders'
equity 27,473,844 25,936,254 23,874,982
Total liabilities
and shareholders' --------------------------------------------
equity $312,129,241 $318,464,598 $287,351,605
============================================
1st Pacific Bancorp
Second Quarter 2007 Results
1st Pacific Bancorp
CONSOLIDATED REPORTS OF INCOME
THREE MONTHS ENDED SIX MONTHS ENDED
Jun 30, Jun 30,
2007 2006 2007 2006
------------------------ --------------------------
INTEREST INCOME
Loans,
including
fees $6,187,879 $5,532,555 $12,257,704 $10,573,069
Investment
securities 144,061 58,761 276,573 99,408
Federal
funds sold 237,155 224,482 482,466 369,360
---------- ---------- ----------- -----------
Total
interest
income 6,569,095 5,815,798 13,016,743 11,041,837
---------- ---------- ----------- -----------
INTEREST EXPENSE
Deposits 2,382,268 1,813,927 4,797,317 3,283,914
Subordinated
debt and
other
borrowings 419,089 93,603 714,197 197,848
---------- ---------- ----------- -----------
Total
interest
expense 2,801,357 1,907,530 5,511,514 3,481,762
---------- ---------- ----------- -----------
Net Interest
Income 3,767,738 3,908,268 7,505,229 7,560,075
Provision for
Loan Losses 74,000 169,000 151,000 348,000
---------- ---------- ----------- -----------
Net interest
income after
provision for
loan losses 3,693,738 3,739,268 7,354,229 7,212,075
NON INTEREST INCOME
Service charges,
fees and
other income 95,911 94,486 218,013 200,330
Brokered loan
fees and
gains on
loan sales 80,493 50,284 128,283 64,070
---------- ---------- ----------- -----------
Total non
interest
income 176,404 144,770 346,296 264,400
NON INTEREST EXPENSE
Salaries and
benefits 1,584,469 1,517,396 3,214,234 3,063,618
Occupancy and
equipment 401,672 384,760 801,845 723,939
Other expense 752,348 575,306 1,416,676 1,108,909
---------- ---------- ----------- -----------
Total non
interest
expense 2,738,489 2,477,462 5,432,755 4,896,466
---------- ---------- ----------- -----------
Income before
income tax
expense 1,131,653 1,406,576 2,267,770 2,580,009
Income tax
expense 467,214 584,855 930,898 1,065,500
---------- ---------- ----------- -----------
Net Income $ 664,439 $ 821,721 $ 1,336,872 $ 1,514,509
========== ========== =========== ===========
Basic earnings
per share $0.17 $0.21 $0.34 $0.39
Diluted
earnings
per share $0.16 $0.20 $0.32 $0.36
Average shares
outstanding 3,899,132 3,866,992 3,894,808 3,859,695
Average diluted
shares
outstanding 4,233,262 4,136,256 4,231,001 4,187,534