SAN DIEGO, Oct. 20, 2006 (PRIMEZONE) -- 1st Pacific Bank of California (OTCBB:FPBS) announced third quarter 2006 net income of $873,000, an increase of 23.8 percent above the $705,000 reported for the third quarter of 2005. Diluted earnings per share were $0.21 compared with $0.17 for the year-earlier quarter, up 23.5 percent. For the first nine months of 2006, earnings were $2.4 million, or $0.57 per diluted share, up 46.9 percent and 46.2 percent, respectively, above 2005 nine-month earnings of $1.6 million, or $0.39 per diluted share.
Third quarter results reflect a moderation of loan growth, a continuation of exceptional asset quality and disciplined control of expenses. Highlights of the quarter include:
-- Year-over-year, quarterly loan growth was $27.7 million, or 12.2
percent; loan growth relative to the second quarter was $1.2 million,
reflecting a continuation of strong production levels in all loan
segments offset by a seasonal paydown of construction loans.
-- Exceptional asset quality improved even further. There were zero net
charge-offs, zero non-performing loans and zero OREO reported for the
third quarter.
-- Net interest income was $3.9 million, up 17.1 percent over the $3.3
million reported in the prior-year third quarter. Net interest income
declined 0.9 percent compared with the second quarter, reflecting a
decline in net interest margin of 20 basis points, to 5.61 percent.
-- Expenses continue to be well-managed and have remained in-line with
asset growth. As a ratio to average assets, noninterest expense has
improved steadily throughout 2006, declining to 3.46 percent this
quarter from 3.82 percent in the fourth quarter of 2005. For the first
nine months of 2006, the efficiency ratio was 62.0 percent compared
with 65.4 percent for the prior-year period.
Vincent Siciliano, President and CEO of 1st Pacific Bank, commented, "This quarter's results reflect a slowdown in our economy and a high level of construction loan payoffs. However, our local economy remains quite healthy and although real estate construction is moderating, we still have many opportunities to generate balance sheet growth."
Total revenue, consisting of net interest income and non-interest income, was $4.01 million for the third quarter of 2006, an increase of 17.2 percent above the $3.4 million reported for the year-ago quarter. Net interest income increased 17.1 percent to $3.9 million, reflecting a 19.3 percent increase in average earning assets and a net interest margin of 5.61 percent, down ten basis points. Year-to-date, net interest income remains robust, up 26.6 percent for the nine-month period from a combination of margin expansion and earning asset growth; the 2006 interest margin averaged 5.76 percent year-to-date, up 25 basis points, and average earning assets increased 21.1 percent for the nine-month comparison. Year-over-year, non-interest income increased 20.0 percent to $140,000 for the third quarter, and 32.5 percent to $404,000 for the nine-month period.
Expenses continue to be well-controlled, declining relative to 1st Pacific's growing asset base. Noninterest expense was $2.4 million for the current quarter, an increase of $380,000 or 18.4 percent, above the year-earlier quarter. Salaries and benefits expense rose $213,000 or 17.2 percent above prior-year levels, to $1.45 million; the increase reflects the addition of eleven full-time equivalent employees, bringing the total to 73, including employees added to staff the new office in El Cajon. As a ratio to average assets, noninterest expense has been improving from its fourth quarter peak of 3.82 percent to its present level of 3.46 percent. The efficiency ratio shows a similar pattern of improvement; since year-end 2005, the ratio reduced to 60.8 percent for the third quarter of 2006 from a high of 65.1 percent for fourth quarter 2005. For the first nine months of 2006, the ratio was 62.0 percent compared with 65.4 percent for the prior-year period.
Asset quality in the third quarter improved from already stellar levels. There were no charge-offs during the third quarter and nonperforming assets were zero at September 30, 2006, compared with $1.0 million of non-performing loans in the previous quarter, and $1.2 million for the year-ago quarter. At September 30, 2006, the loan loss reserve was $3.2 million, or 1.27 percent of loans.
At September 30, 2006, total assets were $293.5 million, an increase of 15.0 percent above the year-earlier quarter; for the same 12-month period, total loans were $255.6 million, up 12.2 percent. Year-to date loan growth still remains a solid $25.2 million, or 10.9 percent, while third quarter loans increased by $1.2 million from the preceding quarter. Although the level of outstandings appears fairly stable quarter over quarter, total numbers mask a significant level of underlying activity, which has resulted in a more balanced loan mix for the current quarter.
"We had already begun to shift our lending focus from construction and land development to a more diversified mix in anticipation of a slowdown in real estate construction in the San Diego area," Mr. Siciliano explained. "We are still seeing good residential construction opportunities, but there are fewer of them. We have been increasing our focus to include other areas of our local economy with good growth prospects, such as small business commercial lending. C&I loans already reflect the success of that initiative with a quarterly increase of $6.9 million, or 15.9 percent." Compared to the second quarter of 2006, construction and land loans declined $11.2 million, or 10.3 percent, to $97.5 million at September 30, 2006; they now account for 38.1 percent of the loan portfolio, down from 42.7 percent in the linked quarter. This decline, which is attributable to higher paydowns for the quarter rather than a slowing of production, was offset by growth in the remaining components of the loan portfolio: C&I loans, up $6.9 million or 15.9 percent; residential and commercial real estate, up $2.4 million or 3.0 percent; SBA loans, up $1.8 million or 9.2 percent; and other consumer loans, up $1.3 million or 41.8 percent.
Deposits were $245.0 at September 30, 2006, up $34.6 million or 16.4 percent year-over-year; since year-end 2005, deposits increased 3.3 percent. "Lower cost transaction and savings accounts continue to be a challenge," Mr. Siciliano explained. "Our reliance on highly competitive time deposits for the majority of our funding growth continues to compress margins. We have been adding new business deposit clients which has offset the flow of deposits outside the banking system," commented Mr. Siciliano.
At September 30, 2006, shareholders' equity was $24.8 million, an increase of $3.4 million, or 15.7 percent from the year-ago quarter. Equity was 8.46 percent of assets at September 30, 2006 compared with 8.41 percent for the prior-year quarter-end. Shares outstanding at the end of the current quarter were 3,869,660. Mr. Siciliano concluded, "This quarter demonstrates the availability of banking opportunities in our marketplace, as well as our flexibility. We remain committed to a strategy of consistent profitability through carefully-managed growth, and we remain very positive about our prospects going forward."
About 1st Pacific Bank of California
1st Pacific Bank is a San Diego-based bank offering 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
CONSOLIDATED FINANCIAL HIGHLIGHTS
(dollars in thousands except per share data)
Quarterly
-----------------------------------------------------
2006 2006 2006 2005 2005
3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr
-----------------------------------------------------
EARNINGS
Net interest
income $ 3,874 3,908 3,652 3,538 3,307
Provision for
loan losses $ 86 169 179 70 170
NonInterest
income $ 140 145 120 186 117
NonInterest
expense $ 2,441 2,477 2,419 2,423 2,061
Net income $ 873 822 693 725 705
Basic earnings
per share $ 0.23 0.21 0.18 0.19 0.18
Diluted earnings
per share $ 0.21 0.20 0.16 0.17 0.17
Average
shares out-
standing(a) 3,868,396 3,866,992 3,852,399 3,849,540 3,849,289
Average diluted
shares out-
standing(a) 4,181,556 4,136,256 4,238,811 4,227,819 4,207,607
PERFORMANCE RATIOS
Return on
average assets 1.23% 1.18% 1.08% 1.13% 1.18%
Return on
average common
equity 14.21% 14.05% 12.41% 13.17% 13.25%
Net interest
margin (fully
tax-equivalent) 5.61% 5.81% 5.87% 5.71% 5.71%
Efficiency ratio 60.82% 61.13% 64.14% 65.07% 60.20%
CAPITAL
Period-ending
equity to
assets 8.46% 8.31% 8.30% 8.37% 8.41%
Book value per
share $ 6.42 6.17 5.96 5.77 5.58
ASSET QUALITY
Net loan
charge-offs
(recoveries) $ 0 0 1 (3) 11
Allowance for
loan losses $ 3,242 3,156 2,987 2,809 2,736
Allowance for
losses to
total loans 1.27% 1.24% 1.21% 1.22% 1.20%
Nonperforming
loans $ 0 1,011 1,027 1,052 1,167
Other real
estate owned $ 0 0 0 0 0
Nonperforming
assets to
total assets 0.00% 0.35% 0.37% 0.40% 0.46%
END OF PERIOD
BALANCES
Total Loans $ 255,560 254,341 247,461 230,382 227,860
Total assets $ 293,530 287,352 277,449 265,582 255,242
Deposits $ 245,011 249,781 235,590 237,208 210,457
Shareholders'
equity $ 24,841 23,875 23,037 22,230 21,466
Full-time
equivalent
employees 73 75 71 69 62
AVERAGE BALANCES
Total Loans $ 254,315 246,028 234,133 226,672 214,618
Earning Assets $ 273,920 269,876 252,305 245,894 229,647
Total assets $ 282,106 278,573 260,654 253,998 237,840
Deposits $ 244,637 247,643 228,813 222,452 207,197
Shareholders'
equity $ 24,358 23,456 22,634 21,848 21,114
9 Months Year-To-Date
--------------------
2006 2005
--------------------
EARNINGS
Net interest income $ 11,434 9,032
Provision for loan losses $ 434 483
NonInterest income $ 404 305
NonInterest expense $ 7,338 6,108
Net income $ 2,387 1,625
Basic earnings per share $ 0.62 0.42
Diluted earnings per share $ 0.57 0.39
Average shares outstanding(a) 3,862,596 3,837,614
Average diluted shares outstanding(a) 4,185,541 4,169,110
PERFORMANCE RATIOS
Return on average assets 1.17% 0.96%
Return on average common equity 13.59% 10.60%
Net interest margin (fully tax-equivalent) 5.76% 5.51%
Efficiency ratio 61.98% 65.43%
CAPITAL
Period-ending equity to assets 8.46% 8.41%
Book value per share $ 6.33 5.58
ASSET QUALITY
Net loan charge-offs (recoveries) $ 0 11
Allowance for loan losses $ 3,242 2,736
Allowance for losses to total loans 1.27% 1.20%
Nonperforming loans $ 0 1,167
Other real estate owned $ 0 0
Nonperforming assets to total assets 0.00% 0.46%
END OF PERIOD BALANCES
Total Loans $255,560 227,860
Total assets $293,530 255,242
Deposits $245,011 210,457
Shareholders' equity $ 24,841 21,466
Full-time equivalent employees 73 62
AVERAGE BALANCES
Total Loans $244,899 198,790
Earning Assets $265,446 219,180
Total assets $273,856 226,843
Deposits $240,422 199,587
Shareholders' equity $ 23,483 20,494
(a) - Adjusted for 2 for 1 stock split effective June 30, 2005
1st Pacific Bank of California
CONSOLIDATED BALANCE SHEETS
30-Sep-06 31-Dec-05 30-Sep-05
------------ ------------ ------------
ASSETS
Cash and due from banks $ 6,949,190 $ 5,228,147 $ 6,005,648
Federal funds sold 18,180,000 23,710,000 13,920,000
------------ ------------ ------------
Total cash and cash
equivalents 25,129,190 28,938,147 19,925,648
Investment securities
available for sale 9,365,311 3,145,621 4,501,638
FRB, FHLB and other
equity stock, at cost 1,892,850 1,615,500 1,590,950
Construction & Land 97,495,583 94,912,271 90,346,662
Residential & Comm'l RE 81,999,650 65,122,928 65,225,761
SBA 7a & 504 Loans 21,141,858 21,964,919 24,925,771
Commercial Loans 50,557,980 43,970,126 42,075,080
Other Consumer 4,365,279 4,411,829 5,286,362
------------ ------------ ------------
Total loans and leases 255,560,350 230,382,073 227,859,636
Allowance for Loan Losses (3,242,372) (2,808,883) (2,736,415)
------------ ------------ ------------
Total loans and
leases, net 252,317,978 227,573,190 225,123,221
Premises and Equipment,
net 1,674,390 1,592,224 1,622,198
Accrued Interest and
Other Assets 3,150,008 2,716,912 2,478,554
------------ ------------ ------------
Total Assets $293,529,727 $265,581,594 $255,242,209
============ ============ ============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing
demand $ 47,509,107 $ 54,772,554 $ 56,860,007
Interest bearing checking 12,097,749 14,539,658 12,511,575
Savings and Money Market 73,602,309 76,319,842 66,128,116
Time Deposits 111,802,138 91,576,357 74,957,765
------------ ------------ ------------
Total Deposits 245,011,303 237,208,411 210,457,463
Subordinated Debentures 5,000,000 5,000,000 5,000,000
Other borrowed money 17,500,000 0 17,500,000
Accrued interest and
other liabilities 1,177,291 1,142,821 819,162
------------ ------------ ------------
Total liabilities 268,688,594 243,351,232 233,776,625
Shareholders' Equity:
Common stock and
additional paid-in
capital 20,460,617 20,261,472 20,215,972
Retained Earnings 4,395,357 2,008,341 1,283,216
Accumulated other
comprehensive income
(loss) (14,841) (39,451) (33,604)
------------ ------------ ------------
Total shareholders'
equity 24,841,133 22,230,362 21,465,584
------------ ------------ ------------
Total liabilities and
shareholders' equity $293,529,727 $265,581,594 $255,242,209
============ ============ ============
1st Pacific Bank of California
CONSOLIDATED REPORTS OF INCOME
THREE MONTHS ENDED NINE MONTHS ENDED
Sept 30, Sept 30,
2006 2005 2006 2005
---------- ---------- ----------- -----------
INTEREST INCOME
Loans, including
fees $5,831,068 $4,282,422 $16,404,137 $11,266,103
Investment
securities 137,227 57,516 236,635 185,274
Federal funds sold 109,842 73,831 479,202 298,911
---------- ---------- ----------- -----------
Total interest
income 6,078,137 4,413,769 17,119,974 11,750,288
---------- ---------- ----------- -----------
INTEREST EXPENSE
Deposits 2,029,974 1,002,640 5,313,888 2,529,948
Subordinated debt and
other borrowings 174,444 103,729 372,292 188,756
---------- ---------- ----------- -----------
Total interest
expense 2,204,418 1,106,369 5,686,180 2,718,704
---------- ---------- ----------- -----------
Net Interest Income 3,873,719 3,307,400 11,433,794 9,031,584
Provision for Loan
Losses 86,000 170,000 434,000 482,500
---------- ---------- ----------- -----------
Net interest income
after provision for
loan losses 3,787,719 3,137,400 10,999,794 8,549,084
NON INTEREST INCOME
Service charges, fees
and other income 99,781 83,544 300,111 236,808
Brokered loan fees and
gains on loan sales 40,200 33,087 104,270 68,159
---------- ---------- ----------- -----------
Total non interest
income 139,981 116,631 404,381 304,967
NON INTEREST EXPENSE
Salaries and benefits 1,451,822 1,238,550 4,515,440 3,629,770
Occupancy and
equipment 399,205 356,024 1,156,568 1,004,885
Other expense 590,266 466,783 1,665,751 1,473,787
---------- ---------- ----------- -----------
Total non interest
expense 2,441,293 2,061,357 7,337,759 6,108,442
---------- ---------- ----------- -----------
Income before
income tax
expense 1,486,407 1,192,674 4,066,416 2,745,609
Income tax expense 613,900 487,600 1,679,400 1,120,600
---------- ---------- ----------- -----------
Net Income $ 872,507 $ 705,074 $ 2,387,016 $ 1,625,009
========== ========== =========== ===========
Basic earnings
per share $ 0.23 $ 0.18 $ 0.62 $ 0.42
Diluted earnings
per share $ 0.21 $ 0.17 $ 0.57 $ 0.39
Average shares
outstanding(a) 3,868,396 3,849,289 3,862,596 3,837,614
Average diluted
shares
outstanding(a) 4,181,556 4,207,607 4,185,541 4,169,110
(a) - Adjusted for 2 for 1 stock split effective June 30, 2005