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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Pacific Capital Bancorp (MM) | NASDAQ:PCBCD | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 28.07 | 0 | 01:00:00 |
Pacific City Financial Corporation (the “Company”) (NASDAQ: PCB), the holding company of Pacific City Bank (the “Bank”), today reported net income of $6.5 million, or $0.44 per diluted common share for the third quarter of 2018, compared with $4.8 million, or $0.35 per diluted common share, in the previous quarter and $4.8 million, or $0.35 per diluted common share, in the third quarter of 2017.
During the third quarter of 2018, the Company successfully completed its initial public offering ("IPO") for net proceeds of $45.5 million and its common stock began trading on the Nasdaq Global Select Market under the symbol "PCB."
Q3 2018 Financial Highlights
"We are pleased to announce a solid 2018 third quarter results that coincided with our successful IPO. The new capital from the IPO is providing us with strong capital ratios and a base to continue to increase the value of our franchise," stated Henry Kim, President and Chief Executive Officer. "We like the direction that our profitability measurements are headed. Our net interest margin increased to 4.17%, our efficiency ratio improved to 49.34%, and our return on average assets improved to 1.60% for the third quarter of 2018 from the prior quarter."
Financial Highlights
Three Months Ended Nine Months Ended (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) ($ in thousands, except per share data) 9/30/2018 6/30/2018 % Change 9/30/2017 % Change 9/30/2018 9/30/2017 % Change Net income $ 6,543 $ 4,762 37.4 % $ 4,806 36.1 % $ 17,569 $ 14,064 24.9 % Diluted earnings per common share $ 0.44 $ 0.35 25.5 % $ 0.35 23.6 % $ 1.25 $ 1.04 20.3 % Net interest income $ 16,716 $ 15,882 5.3 % $ 14,383 16.2 % $ 47,892 $ 40,237 19.0 % Provision for loan losses 417 425 (1.9 )% 586 (28.8 )% 937 114 721.9 % Noninterest income 2,580 2,273 13.5 % 3,461 (25.5 )% 8,215 10,532 (22.0 )% Noninterest expense 9,520 10,940 (13.0 )% 8,958 6.3 % 30,091 26,275 14.5 % Return on average assets (1) 1.60 % 1.20 % 1.38 % 1.50 % 1.43 % Return on average shareholders' equity (1), (2) 14.50 % 12.74 % 13.69 % 14.85 % 13.98 % Net interest margin (1) 4.17 % 4.08 % 4.24 % 4.19 % 4.20 % Efficiency ratio (3) 49.34 % 60.26 % 50.20 % 53.63 % 51.75 % (Unaudited) (Unaudited) (Unaudited) ($ in thousands, except per share data) 9/30/2018 6/30/2018 % Change 12/31/2017 % Change 9/30/2017 % Change Total assets $ 1,663,787 $ 1,619,169 2.8 % $ 1,441,999 15.4 % $ 1,403,816 18.5 % Net loans held-for-investment 1,296,027 1,242,235 4.3 % 1,177,775 10.0 % 1,135,093 14.2 % Total deposits 1,419,526 1,427,245 (0.5 )% 1,251,290 13.4 % 1,213,274 17.0 % Book value per common share (2), (4) $ 12.71 $ 11.27 12.7 % $ 10.60 19.9 % $ 10.48 21.3 % Tier 1 leverage ratio (consolidated) 12.59 % 9.58 % 10.01 % 10.15 % Total shareholders' equity to total assets (2) 12.20 % 9.35 % 9.86 % 10.01 %(1) Ratios are presented on an annualized basis.
(2) The Company did not have any intangible equity components for the presented periods.
(3) The ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.
(4) The ratios are calculated by dividing total shareholders' equity by the number of outstanding common shares.
Result of Operations
Net Income
Net income was $6.5 million for the three months ended September 30, 2018, an increase of $1.8 million, or 37.4%, from $4.8 million for the three months ended June 30, 2018, and an increase of $1.7 million, or 36.1%, from $4.8 million for the three months ended September 30, 2017. Diluted earnings per common share were $0.44, $0.35 and $0.35, respectively, for the three months ended September 30, 2018, June 30, 2018 and September 30, 2017.
For the nine months ended September 30, 2018, net income was $17.6 million, an increase of $3.5 million, or 24.9%, from $14.1 million for the nine months ended September 30, 2017. Diluted earnings per common share were $1.25 and $1.04 for the nine months ended September 30, 2018 and 2017, respectively.
Net Interest Income and Net Interest Margin
Net interest income was $16.7 million for the three months ended September 30, 2018, an increase of $834 thousand, or 5.3%, from $15.9 million for the three months ended June 30, 2018, and an increase of $2.3 million, or 16.2%, from $14.4 million for the three months ended September 30, 2017.
For the nine months ended September 30, 2018, net interest income was $47.9 million, an increase of $7.7 million, or 19.0%, from $40.2 million for the nine months ended September 30, 2017. These increases were primarily due to increases in average balance and average yield of interest-earning assets, partially offset by increases in average balance and average cost of interest-bearing liabilities.
Interest income on loans was $19.7 million for the three months ended September 30, 2018, an increase of $1.1 million, or 5.9%, from $18.6 million for the three months ended June 30, 2018, and an increase of $3.7 million, or 23.1%, from $16.0 million for the three months ended September 30, 2017. For the nine months ended September 30, 2018, interest income on loans was $55.7 million, an increase of $11.1 million, or 24.8%, from $44.7 million for the nine months ended September 30, 2017. The increases were primarily due to increases in average balance and average yield of total loans (which includes both loans held-for-sale and loans held-for-investment, net of deferred cost (fees)). The increase in average yield on total loans was due to the Company's high proportion of variable rate loans that have repriced in the current rising interest rate environment. Average balance of total loans was $1.28 billion for the three months ended September 30, 2018, compared with $1.24 billion for the three months ended June 30, 2018 and $1.12 billion for the three months ended September 30, 2017, and average yield was 6.10% for the three months ended September 30, 2018 compared with 6.04% for the three months ended June 30, 2018 and 5.65% for the three months ended September 30, 2017. For the nine months ended September 30, 2018, average balance and average yield were $1.25 billion and 5.98%, respectively, compared with $1.09 billion and 5.50%, respectively, for the nine months ended September 30, 2017.
The following table presents a composition of total loans by interest rate type accompanied with the weighted-average contractual rates as of the dates indicated:
(Unaudited) (Unaudited) (Unaudited) 9/30/2018 6/30/2018 12/31/2017 9/30/2017 Weighted- Weighted- Weighted- Weighted-Average
Average
Average
Average
% to Total
Contractual% to Total
Contractual% to Total
Contractual% to Total
Contractual Loans Rate Loans Rate Loans Rate Loans Rate Fixed rate loans 32.3% 5.10% 27.0% 5.08% 26.6% 5.09% 26.5% 5.09% Variable rate loans 67.7% 6.03% 73.0% 5.84% 73.4% 5.38% 73.5% 5.14%Interest income on investment securities was $931 thousand for the three months ended September 30, 2018, an increase of $62 thousand, or 7.1%, from $869 thousand for the three months ended June 30, 2018 and an increase of $185 thousand, or 24.8%, from $746 thousand for the three months ended September 30, 2017. For the nine months ended September 30, 2018, interest income on investment securities was $2.6 million, an increase of $806 thousand, or 43.8%, from $1.8 million for the nine months ended September 30, 2017. The increases were primarily due to increases in average balance and average yield. The increase in average yield was due to additional purchases of investment securities in the current rising rate environment. Average balance of investment securities was $154.0 million for the three months ended September 30, 2018, compared with $147.9 million for the three months ended June 30, 2018 and $140.0 million for the three months ended September 30, 2017, and average yield was 2.40% for the three months ended September 30, 2018 compared with 2.36% for the three months ended June 30, 2018 and 2.11% for the three months ended September 30, 2017. For the nine months ended September 30, 2018, average balance and average yield were $150.5 million and 2.35%, respectively, compared with $120.0 million and 2.05%, respectively, for the nine months ended September 30, 2017.
Total interest expense was $4.8 million for the three months ended September 30, 2018, an increase of $318 thousand, or 7.1%, from $4.5 million for the three months ended June 30, 2018 and an increase of $2.1 million, or 76.6%, compared with $2.7 million in the three months ended September 30, 2017. For the nine months ended September 30, 2018, total interest expense was $12.6 million, an increase of $5.4 million or 75.7%, from $7.2 million for the nine months ended September 30, 2017. The increase compared with the three months ended June 30, 2018 was primarily due to an increase in average cost of interest-bearing liabilities, partially offset by a decrease in average balance of interest bearing liabilities. The increases compared with the three and nine months ended September 30, 2017 was primarily due to increases in both average balance and average cost of interest-bearing liabilities.
Net interest margin was 4.17% for the three months ended September 30, 2018 compared with 4.08% for the three months ended June 30, 2018, and 4.24% for the three months ended September 30, 2017. For the nine months ended September 30, 2018, net interest margin was 4.19% compared with 4.20% for the nine months ended September 30, 2017.
Provision for Loan Losses
Provision for loan losses was $417 thousand for the three months ended September 30, 2018 compared with $425 thousand for the three months ended June 30, 2018 and $586 thousand for the three months ended September 30, 2017. For the nine months ended September 30, 2018, provision for loan losses was $937 thousand compared with $114 thousand for the nine months ended September 30, 2017. The Company has recognized additional provision for loan losses primarily due to an increase in the loans held-for-investment balance. During the three months ended September 30, 2018, the Company recorded a net recovery of $58 thousand compared with a net charge-off of $175 thousand for the three months ended June 30, 2018 and a net recovery of $36 thousand for the three months ended September 30, 2017. Allowance for loan losses to total loans held-for-investment ratio was 1.00% at September 30, 2018, 1.01% at June 30, 2018, 1.03% at December 31, 2017, and 1.02% at September 30, 2017.
Noninterest Income
Noninterest income was $2.6 million for the three months ended September 30, 2018, an increase of $307 thousand, or 13.5%, from $2.3 million for the three months ended June 30, 2018, but a decrease of $881 thousand, or 25.5%, from $3.5 million for the three months ended September 30, 2017. For the nine months ended September 30, 2018, noninterest income was $8.2 million, a decrease of $2.3 million, or 22.0%, from $10.5 million for the nine months ended September 30, 2017.
The increase compared with the three months ended June 30, 2018 was primarily due to increases in gain on sale of Small Business Administration ("SBA") loans, service charges and fees on deposits and other income, partially offset by decreases in gain on sale of residential property loans and servicing income. The increase in gain on sale of SBA loans was primarily due to SBA loan sales commitments of $16.7 million that were not settled and included in loans held-for-sale at June 30, 2018, and subsequently settled during July 2018. The decrease compared with the three months ended September 30, 2017 was primarily due to decreases in gain on sale of SBA and residential property loans and servicing income, partially offset by an increase in service charges, fees on deposits and other income. The decrease compared with the nine months ended September 30, 2017 was primarily due to decreases in gain on sale of SBA loans and servicing income, partially offset by increases in gain on sale of residential property and other loans, service charges and fees on deposits, and other income.
The Company sold the guaranteed portion of SBA loans of $23.1 million, $12.6 million and $29.5 million, respectively, and residential property loans of $2.2 million, $7.5 million and $4.3 million, respectively, for the three months ended September 30, 2018, June 30, 2018 and September 30, 2017. For the nine months ended September 30, 2018 and 2017, the Company sold the guaranteed portion of SBA loans of $65.6 million and $98.1 million, respectively, residential property loans of $10.9 million and $10.7 million, respectively, and commercial property loans of $1.1 million and none, respectively. The decreases in servicing income were due to an increase in servicing asset amortization from a higher prepayment trend, partially offset by an increase in servicing fee income resulting from an increase in the amount of loans being serviced. The increases in service charges and fees on deposits were primarily due to an increased transactions in deposits.
Noninterest Expense
Noninterest expense was $9.5 million for the three months ended September 30, 2018, a decrease of $1.4 million, or 13.0%, from $10.9 million for the three months ended June 30, 2018 and an increase of $562 thousand, or 6.3%, from $9.0 million for the three months ended September 30, 2017. For the nine months ended September 30, 2018, noninterest expense was $30.1 million, an increase of $3.8 million, or 14.5%, from $26.3 million for the nine months ended September 30, 2017.
The decrease compared with the three months ended June 30, 2018 was primarily due to decreases in salaries and employee benefits, professional fees and other expenses, partially offset by increases in data processing, loan related expense and a regulatory assessment. The decrease in salaries and employee benefits was due primarily to adjustments made to compensation related accruals of $486 thousand. The decrease in professional fees was primarily due to a true-up of expenses that are directly related to the stock offering during the three months ended September 30, 2018. The decrease in other expenses was primarily due to a one-time expense of $577 thousand incurred during the three months ended June 30, 2018 for a reimbursement for a SBA loan guarantee previously paid by the SBA on a loan originated in 2017 that subsequently defaulted and was ultimately determined to be ineligible for the SBA guaranty. The increases in data processing, loan related expense and regulatory assessment were primarily due to growth in operations.
The increases compared to the three and nine months ended September 30, 2017 were primarily due to growth in operations, as well as additional expenses related to the listing of our shares of common stock on the Nasdaq Global Select Market, and a reimbursement paid to SBA.
Efficiency ratio was 49.34% for the three months ended September 30, 2018 compared with 60.26% for the three months ended June 30, 2018 and 50.20% for the three months ended September 30, 2017. For the nine months ended September 30, 2018, efficiency ratio was 53.63% compared with 51.75% for the nine months ended September 30, 2017.
Income Tax Provision
Effective income tax rate was 30.1% and 29.9%, respectively, for the three and nine months ended September 30, 2018 compared with 42.1% and 42.3%, respectively, for the three and nine months ended September 30, 2017. The decreases were primarily due to the enactment of H.R. 1, also known as the Tax Cuts and Jobs Act, on December 22, 2017. Beginning in 2018, H.R. 1 reduced the U.S. federal corporate tax rate from 35% to 21% and changed or limited certain tax deductions.
Balance Sheet
Total Assets
Total assets were $1.66 billion at September 30, 2018, an increase of $44.6 million, or 2.8%, from $1.62 billion at June 30, 2018, an increase of $221.8 million, or 15.4%, from $1.44 billion at December 31, 2017, and an increase of $260.0 million, or 18.5%, from $1.40 billion at September 30, 2017.
Loans
Loans held-for-investment, net of deferred costs (fees) ("total loans held-for-investment"), were $1.31 billion at September 30, 2018, an increase of $54.3 million, or 4.3%, from $1.25 billion at June 30, 2018, an increase of $119.1 million, or 10.0%, from $1.19 billion at December 31, 2017, and an increase of $162.4 million, or 14.2%, from $1.15 billion at September 30, 2017. The increase for the three months ended September 30, 2018 was primarily due to new funding of $159.2 million and advances on lines of credit of $27.2 million, partially offset by pay-downs and pay-offs of $132.2 million, and charge-offs of $45 thousand. The increase for the nine months ended September 30, 2018 was primarily due to new funding of $352.3 million and advances on lines of credit of $96.9 million, partially offset by pay-downs and pay-offs of $322.6 million and charge-offs of $480 thousand.
The following table presents a composition of total loans by loan type as of the dates indicated:
(Unaudited) (Unaudited) (Unaudited) ($ in thousands) 9/30/2018 6/30/2018 % Change 12/31/2017 % Change 9/30/2017 % Change Commercial property $ 703,250 $ 674,599 4.2 % $ 662,840 6.1 % $ 644,954 9.0 % Residential property 215,340 197,598 9.0 % 168,898 27.5 % 154,812 39.1 % SBA property 126,816 133,081 (4.7 )% 130,438 (2.8 )% 125,010 1.4 % Construction 28,895 28,659 0.8 % 23,215 24.5 % 23,703 21.9 % Commercial term 96,102 80,791 19.0 % 77,438 24.1 % 78,659 22.2 % Commercial lines of credit 72,219 72,799 (0.8 )% 60,850 18.7 % 54,802 31.8 % SBA commercial term 28,312 28,276 0.1 % 30,199 (6.2 )% 31,283 (9.5 )% International 10,353 7,734 33.9 % 1,920 439.2 % 1,103 838.6 % Consumer loans 27,472 30,775 (10.7 )% 33,870 (18.9 )% 32,053 (14.3 )% Loans held-for-investment 1,308,759 1,254,312 4.3 % 1,189,668 10.0 % 1,146,379 14.2 % Deferred loan costs (fees) 365 544 (32.9 )% 331 10.3 % 365 — % Total loans held-for-investment 1,309,124 1,254,856 4.3 % 1,189,999 10.0 % 1,146,744 14.2 % Loans held-for-sale 12,957 20,331 (36.3 )% 5,297 144.6 % 2,501 418.1 % Total loans $ 1,322,081 $ 1,275,187 3.7 % $ 1,195,296 10.6 % $ 1,149,245 15.0 %Non-Performing Assets
Non-performing loans (“NPLs”) were $1.6 million at September 30, 2018, a decrease of $454 thousand, or 22.4%, from $2.0 million at June 30, 2018 and a decrease of $1.7 million, or 51.4%, from $3.2 million at December 31, 2017, but an increase of $61 thousand, or 4.0%, from $1.5 million at September 30, 2017. NPLs to total loans held-for-investment ratio was 0.12% at September 30, 2018, 0.16% at June 30, 2018, 0.27% at December 31, 2017, and 0.13% at September 30, 2017.
The Company had no other real estate owned (“OREO”) at September 30, 2018 and June 30, 2018 compared with $99 thousand at December 31, 2017 and $141 thousand at September 30, 2017.
Non-performing assets (“NPAs”), which consist of NPL and OREO, and the NPAs to total assets ratio were $1.6 million and 0.09%, respectively, at September 30, 2018, $2.0 million and 0.13%, respectively, at June 30, 2018, $3.3 million and 0.23%, respectively, at December 31, 2017, and $1.7 million and 0.12%, respectively, at September 30, 2017.
The following table presents compositions of NPLs and NPAs as of the dates indicated:
(Unaudited) (Unaudited) (Unaudited) ($ in thousands) 9/30/2018 6/30/2018 % Change 12/31/2017 % Change 9/30/2017 % Change Nonaccrual loans: Commercial property $ 234 $ 240 (2.5 )% $ 318 (26.4 )% $ 330 (29.1 )% Residential property — — — % 730 (100.0 )% — — % SBA property 970 1,203 (19.4 )% 1,810 (46.4 )% 592 63.9 % Commercial term — — — % 4 (100.0 )% 118 (100.0 )% Commercial lines of credit — 39 (100.0 )% 10 (100.0 )% 31 (100.0 )% SBA commercial term 254 519 (51.1 )% 338 (24.9 )% 414 (38.6 )% Consumer loans 114 25 356.0 % 24 375.0 % 26 338.5 % Total nonaccrual loans held-for-investment 1,572 2,026 (22.4 )% 3,234 (51.4 )% 1,511 4.0 % Loans past due 90 days or more and still accruing — — — % — — % — — % NPLs 1,572 2,026 (22.4 )% 3,234 (51.4 )% 1,511 4.0 % OREO — — — % 99 (100.0 )% 141 (100.0 )% NPAs $ 1,572 $ 2,026 (22.4 )% $ 3,333 (52.8 )% $ 1,652 (4.8 )% Loans modified as troubled debt restructurings ("TDRs"): Accruing TDRs $ 467 $ 453 3.1 % $ 592 (21.1 )% $ 1,676 (72.1 )% Nonaccrual TDRs 458 548 (16.4 )% 1,675 (72.7 )% 609 (24.8 )% Total TDRs $ 925 $ 1,001 (7.6 )% $ 2,267 (59.2 )% $ 2,285 (59.5 )% NPLs to total loans held-for-investment 0.12 % 0.16 % 0.27 % 0.13 % NPAs to total assets 0.09 % 0.13 % 0.23 % 0.12 %Classified Assets
Classified loans were $6.2 million at September 30, 2018, an increase of $1.9 million, or 43.9%, from $4.3 million at June 30, 2018, an increase of $1.3 million, or 25.2%, from $5.0 million at December 31, 2017 and an increase of $418 thousand, or 7.2%, from $5.8 million at September 30, 2017. Classified assets, which consist of classified loans and OREO, and the classified assets to total assets ratios were $6.2 million and 0.37%, respectively, at September 30, 2018, $4.3 million and 0.27%, respectively, at June 30, 2018, $5.1 million and 0.35%, respectively, at December 31, 2017, and $6.0 million and 0.42%, respectively, at September 30, 2017.
Investment Securities
Total investment securities were $157.1 million at September 30, 2018, an increase of $4.6 million, or 3.0%, from $152.5 million at June 30, 2018, an increase of $6.3 million, or 4.2%, from $150.8 million at December 31, 2017 and an increase of $14.2 million, or 9.9%, from $142.9 million at September 30, 2017. The increase for the three months ended September 30, 2018 was primarily due to purchases of $12.0 million, partially offset by principal pay-downs and calls of $6.7 million, net premium amortization of $172 thousand and a decrease in fair value of securities available-for-sale of $604 thousand. The increase for the nine months ended September 30, 2018 was primarily due to purchases of $28.1 million, partially offset by principal pay-downs and calls of $18.6 million, net premium amortization of $578 thousand and a decrease in fair value of securities available-for-sale of $2.6 million.
Deposits
Total deposits were $1.42 billion at September 30, 2018, a decrease of $7.7 million, or 0.5%, from $1.43 billion at June 30, 2018, an increase of $168.2 million, or 13.4%, from $1.25 billion at December 31, 2017 and an increase of $206.3 million, or 17.0%, from $1.21 billion at September 30, 2017. The decrease for the three months ended September 30, 2018 was primarily due to closed accounts of $87.1 million and net balance decreases of $42.5 million, partially offset by new accounts of $121.9 million. The increase for the nine months ended September 30, 2018 was primarily due to new accounts of $505.3 million, partially offset by closed accounts of $255.9 million and net balance decreases of $81.2 million.
The following table presents deposit mix as of the dates indicated:
(Unaudited) (Unaudited) (Unaudited) 9/30/2018 6/30/2018 12/31/2017 9/30/2017 ($ in thousands) Amount % to Total Amount % to Total Amount % to Total Amount % to Total Noninterest-bearing demand deposits $ 350,346 24.7% $ 347,342 24.3% $ 319,026 25.5% $ 324,690 26.8% Interest-bearing deposits: NOW 11,638 0.8% 13,812 1.0% 10,324 0.8% 8,908 0.7% Money market accounts 263,704 18.6% 259,098 18.2% 299,390 23.9% 307,046 25.3% Savings 8,417 0.6% 9,886 0.7% 8,164 0.7% 9,250 0.8% Time deposits under $250,000 381,870 26.9% 393,053 27.5% 295,274 23.6% 288,830 23.8% Time deposits of $250,000 and over 256,051 18.0% 251,554 17.6% 166,612 13.3% 157,044 12.9% State and brokered time deposits 147,500 10.4% 152,500 10.7% 152,500 12.2% 117,506 9.7% Total interest-bearing deposits 1,069,180 75.3% 1,079,903 75.7% 932,264 74.5% 888,584 73.2% Total deposits $ 1,419,526 100.0% $ 1,427,245 100.0% $ 1,251,290 100.0% $ 1,213,274 100.0%Borrowings
Borrowings from Federal Home Loan Bank (“FHLB”) were $30.0 million at September 30, 2018 and June 30, 2018, and $40.0 million at December 31, 2017 and September 30, 2017. At September 30, 2018, borrowings from FHLB bore fixed interest rates with original maturity terms ranging from two to five years.
Shareholders’ Equity
Shareholders’ equity was $202.9 million at September 30, 2018, an increase of $51.5 million, or 34.0%, from $151.4 million at June 30, 2018, an increase of $60.8 million, or 42.7%, from $142.2 million at December 31, 2017 and an increase of $62.4 million, or 44.4%, from $140.5 million at September 30, 2017. The increases were primarily due to the net proceeds of $45.5 million from the completion of the Company's underwritten initial public offering as well as the exercise of the underwriters' 30-day option, which resulted an issuance of 2,508,234 shares of the Company's common stock, during the three months ended September 30, 2018.
Capital Ratios
The following table presents capital ratios for the Company and the Bank as of dates indicated:
(Unaudited) (Unaudited) (Unaudited) 9/30/2018 6/30/2018 12/31/2017 9/30/2017 Pacific City Financial Corporation Common tier 1 capital (to risk-weighted assets) 16.08% 12.43% 12.15% 12.36% Total capital (to risk-weighted assets) 17.12% 13.46% 13.20% 13.40% Tier 1 capital (to risk-weighted assets) 16.08% 12.43% 12.15% 12.36% Tier 1 capital (to average assets) 12.59% 9.58% 10.01% 10.15% Pacific City Bank Common tier 1 capital (to risk-weighted assets) 15.89% 12.37% 12.06% 12.28% Total capital (to risk-weighted assets) 16.93% 13.40% 13.12% 13.32% Tier 1 capital (to risk-weighted assets) 15.89% 12.37% 12.06% 12.28% Tier 1 capital (to average assets) 12.45% 9.53% 9.94% 10.08%About Pacific City Financial Corporation
Pacific City Financial Corporation is the bank holding company for Pacific City Bank, a $1.66 billion asset bank, offering a full suite of commercial banking services through its wholly owned subsidiary, Pacific City Bank, a California state chartered bank, to small to medium-sized businesses, individuals and professionals, primarily in Southern California, and predominantly in Korean-American and other minority communities.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or words or phases of similar meaning. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. These and other important factors are detailed in various securities law filings made periodically by the Company, copies of which are available from the Company without charge. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements. Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise, except as required by law.
Pacific City Financial Corporation and Subsidiary Consolidated Balance Sheets($ in thousands, except share and per share data)
(Unaudited) (Unaudited) (Unaudited) 9/30/2018 6/30/2018 % Change 12/31/2017 % Change 9/30/2017 % Change Assets Cash and due from banks $ 27,532 $ 33,800 (18.5 )% $ 16,662 65.2 % $ 18,182 51.4 % Interest-bearing deposits in financial institutions 136,524 134,846 1.2 % 56,996 139.5 % 69,684 95.9 % Total cash and cash equivalents 164,056 168,646 (2.7 )% 73,658 122.7 % 87,866 86.7 % Securities available-for-sale, at fair value 135,089 132,106 2.3 % 129,689 4.2 % 123,170 9.7 % Securities held-to-maturity 21,991 20,390 7.9 % 21,070 4.4 % 19,720 11.5 % Total investment securities 157,080 152,496 3.0 % 150,759 4.2 % 142,890 9.9 % Loans held-for-sale 12,957 20,331 (36.3 )% 5,297 144.6 % 2,501 418.1 % Loans held-for-investment, net of deferred loan costs (fees) 1,309,124 1,254,856 4.3 % 1,189,999 10.0 % 1,146,744 14.2 % Allowance for loan losses (13,097 ) (12,621 ) 3.8 % (12,224 ) 7.1 % (11,651 ) 12.4 % Net loans held-for-investments 1,296,027 1,242,235 4.3 % 1,177,775 10.0 % 1,135,093 14.2 % Premises and equipment, net 4,615 4,892 (5.7 )% 4,723 (2.3 )% 4,734 (2.5 )% Federal Home Loan Bank and other bank stock 7,433 7,433 — % 6,589 12.8 % 6,589 12.8 % Other real estate owned, net — — — % 99 (100.0 )% 141 (100.0 )% Deferred tax assets, net 4,209 4,360 (3.5 )% 3,847 9.4 % 6,540 (35.6 )% Servicing assets 8,114 8,390 (3.3 )% 8,973 (9.6 )% 8,939 (9.2 )% Accrued interest receivable and other assets 9,296 10,386 (10.5 )% 10,279 (9.6 )% 8,523 9.1 % Total assets $ 1,663,787 $ 1,619,169 2.8 % $ 1,441,999 15.4 % $ 1,403,816 18.5 % Liabilities Deposits: Noninterest-bearing demand $ 350,346 $ 347,342 0.9 % $ 319,026 9.8 % $ 324,690 7.9 % Savings, NOW and money market accounts 283,759 282,796 0.3 % 317,878 (10.7 )% 325,204 (12.7 )% Time deposits under $250,000 429,370 445,553 (3.6 )% 347,774 23.5 % 306,337 40.2 % Time deposits $250,000 and over 356,051 351,554 1.3 % 266,612 33.5 % 257,043 38.5 % Total deposits 1,419,526 1,427,245 (0.5 )% 1,251,290 13.4 % 1,213,274 17.0 % Borrowings from Federal Home Loan Bank 30,000 30,000 — % 40,000 (25.0 )% 40,000 (25.0 )% Accrued interest payable and other liabilities 11,323 10,493 7.9 % 8,525 32.8 % 10,001 13.2 % Total liabilities 1,460,849 1,467,738 (0.5 )% 1,299,815 12.4 % 1,263,275 15.6 % Commitments and contingent liabilities Shareholders' equity Common stock 171,495 125,579 36.6 % 125,430 36.7 % 125,359 36.8 % Additional paid-in capital 3,158 3,206 (1.5 )% 2,941 7.4 % 2,785 13.4 % Retained earnings 31,325 25,258 24.0 % 15,036 108.3 % 12,857 143.6 % Accumulated other comprehensive loss, net (3,040 ) (2,612 ) 16.4 % (1,223 ) 148.6 % (460 ) 560.9 % Total shareholders’ equity 202,938 151,431 34.0 % 142,184 42.7 % 140,541 44.4 % Total liabilities and shareholders’ equity $ 1,663,787 $ 1,619,169 2.8 % $ 1,441,999 15.4 % $ 1,403,816 18.5 % Outstanding common share 15,972,914 13,435,214 13,417,899 13,413,059 Book value per common share (1) $ 12.71 $ 11.27 $ 10.60 $ 10.48 Total loan to total deposit ratio 93.14 % 89.35 % 95.53 % 94.72 % Noninterest-bearing deposits to total deposits 24.68 % 24.34 % 25.50 % 26.76 %(1) The ratios are calculated by dividing total shareholders' equity by the number of outstanding common shares. The Company did not have any intangible equity components for the presented periods.
Pacific City Financial Corporation and Subsidiary Consolidated Statements of Income($ in thousands, except share and per share data)
Three Months Ended Nine Months Ended (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) 9/30/2018 6/30/2018 % Change 9/30/2017 % Change 9/30/2018 9/30/2017 % Change Interest income: Interest and fees on loans $ 19,699 $ 18,610 5.9 % $ 16,000 23.1 % $ 55,749 $ 44,684 24.8 % Interest on investment securities 931 869 7.1 % 746 24.8 % 2,648 1,842 43.8 % Interest and dividend on other interest-earning assets 866 865 0.1 % 344 151.7 % 2,071 870 138.0 % Total interest income 21,496 20,344 5.7 % 17,090 25.8 % 60,468 47,396 27.6 % Interest expense: Interest on deposits 4,643 4,292 8.2 % 2,534 83.2 % 12,101 6,983 73.3 % Interest on other borrowings 137 170 (19.4 )% 173 (20.8 )% 475 176 169.9 % Total interest expense 4,780 4,462 7.1 % 2,707 76.6 % 12,576 7,159 75.7 % Net interest income 16,716 15,882 5.3 % 14,383 16.2 % 47,892 40,237 19.0 % Provision for loan losses 417 425 (1.9 )% 586 (28.8 )% 937 114 721.9 % Net interest income after provision for loan losses 16,299 15,457 5.4 % 13,797 18.1 % 46,955 40,123 17.0 % Noninterest income: Gain on sale of SBA loans 1,306 863 51.3 % 2,125 (38.5 )% 4,219 6,760 (37.6 )% Gain on sale of residential property loans 22 170 (87.1 )% 34 (35.3 )% 213 113 88.5 % Gain on sale of other loans — — — % — — % 45 — — % Service charges and fees on deposits 377 376 0.3 % 333 13.2 % 1,102 1,020 8.0 % Servicing income 578 585 (1.2 )% 674 (14.2 )% 1,789 1,841 (2.8 )% Other income 297 279 6.5 % 295 0.7 % 847 798 6.1 % Total noninterest income 2,580 2,273 13.5 % 3,461 (25.5 )% 8,215 10,532 (22.0 )% Noninterest expense: Salaries and employee benefits 5,840 6,153 (5.1 )% 5,594 4.4 % 18,239 16,689 9.3 % Occupancy and equipment 1,244 1,246 (0.2 )% 1,073 15.9 % 3,634 3,259 11.5 % Professional fees 213 988 (78.4 )% 445 (52.1 )% 1,724 1,341 28.6 % Marketing and business promotion 555 541 2.6 % 500 11.0 % 1,484 1,220 21.6 % Data processing 314 295 6.4 % 276 13.8 % 911 786 15.9 % Director fees and expenses 220 211 4.3 % 198 11.1 % 661 541 22.2 % Loan related expense 83 63 31.7 % 98 (15.3 )% 205 301 (31.9 )% Regulatory assessments 192 145 32.4 % 108 77.8 % 469 309 51.8 % Other expenses 859 1,298 (33.8 )% 666 29.0 % 2,764 1,829 51.1 % Total noninterest expense 9,520 10,940 (13.0 )% 8,958 6.3 % 30,091 26,275 14.5 % Income before income taxes 9,359 6,790 37.8 % 8,300 12.8 % 25,079 24,380 2.9 % Income tax expense 2,816 2,028 38.9 % 3,494 (19.4 )% 7,510 10,316 (27.2 )% Net income $ 6,543 $ 4,762 37.4 % $ 4,806 36.1 % $ 17,569 $ 14,064 24.9 % Earnings per common share Basic $ 0.44 $ 0.35 $ 0.36 $ 1.27 $ 1.05 Diluted $ 0.44 $ 0.35 $ 0.35 $ 1.25 $ 1.04 Average common shares outstanding Basic 14,730,120 13,432,775 13,412,407 13,865,190 13,405,413 Diluted 14,924,546 13,628,677 13,544,855 14,051,561 13,530,450 Dividend paid per common share $ 0.03 $ 0.03 $ 0.03 $ 0.09 $ 0.09 Return on average assets (1) 1.60 % 1.20 % 1.38 % 1.50 % 1.43 %Return on average shareholders’ equity (1), (2)
14.50 % 12.74 % 13.69 % 14.85 % 13.98 %Efficiency ratio (3)
49.34 % 60.26 % 50.20 % 53.63 % 51.75 %(1) Ratios are presented on an annualized basis.
(2) The Company did not have any intangible equity components for the presented periods.
(3) The ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.
Pacific City Financial Corporation and Subsidiary Average Balance, Average Yield, and Average Rate($ in thousands)
Three Months Ended (Unaudited) (Unaudited) (Unaudited) 9/30/2018 6/30/2018 9/30/2017 Interest Avg. Interest Avg. Interest Avg. Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate Balance Expense Rate Assets Interest-earning assets: Total loans (1) $ 1,280,352 $ 19,699 6.10% $ 1,236,075 $ 18,610 6.04% $ 1,123,725 $ 16,000 5.65% U.S. government agency securities 24,102 154 2.53% 23,212 141 2.44% 26,214 152 2.30% Mortgage-backed securities 69,592 414 2.36% 65,708 378 2.31% 60,922 312 2.03% Collateralized mortgage obligation 54,094 324 2.38% 52,455 309 2.36% 44,771 236 2.09% Municipal bonds (2) 6,232 39 2.48% 6,552 41 2.51% 8,057 46 2.27% Other interest-earning assets 156,831 866 2.19% 175,615 865 1.98% 81,222 344 1.68% Total interest-earning assets 1,591,203 21,496 5.36% 1,559,617 20,344 5.23% 1,344,911 17,090 5.04% Noninterest-earning assets: Cash and cash equivalents 18,596 18,530 17,414 Allowance for loan losses (12,774 ) (12,446 ) (11,327 ) Other assets 26,828 27,460 28,019 Total noninterest-earning assets 32,650 33,544 34,106 Total assets $ 1,623,853 $ 1,593,161 $ 1,379,017 Liabilities and Shareholders’ Equity Interest-bearing liabilities: Deposits: NOW and money market accounts $ 269,514 834 1.23% $ 279,515 773 1.11% $ 322,714 842 1.04% Savings 8,717 6 0.27% 8,739 6 0.28% 9,094 6 0.26% Time deposits 795,202 3,803 1.90% 790,430 3,513 1.78% 538,359 1,686 1.24% Total interest-bearing deposits 1,073,433 4,643 1.72% 1,078,684 4,292 1.60% 870,167 2,534 1.16% Borrowings from Federal Home Loan Bank 30,000 137 1.81% 39,782 170 1.71% 40,000 173 1.72% Total interest-bearing liabilities 1,103,433 4,780 1.72% 1,118,466 4,462 1.60% 910,167 2,707 1.18% Noninterest-bearing liabilities Noninterest-bearing demand 330,021 315,232 320,153 Other liabilities 11,325 9,533 9,407 Total noninterest-bearing liabilities 341,346 324,765 329,560 Total liabilities 1,444,779 1,443,231 1,239,727 Total shareholders' equity 179,074 149,930 139,290 Total liabilities and shareholders’ equity $ 1,623,853 $ 1,593,161 $ 1,379,017 Net interest income $ 16,716 $ 15,882 $ 14,383Net interest spread (3)
3.64% 3.63% 3.86% Net interest margin (4) 4.17% 4.08% 4.24% Total deposits $ 1,403,454 $ 4,643 1.31% $ 1,393,916 $ 4,292 1.24% $ 1,190,320 $ 2,534 0.84% Total funding (5) $ 1,433,454 $ 4,780 1.32% $ 1,433,698 $ 4,462 1.25% $ 1,230,320 $ 2,707 0.87%(1) Total loans include both loans held-for-sale and loans held-for-investment, net of deferred loan costs (fees).
(2) The yield on municipal bonds has not been computed on a tax-equivalent basis.
(3) Net interest spread is calculated by subtracting average rate on interest-bearing liabilities from average yield on interest-earning assets.
(4) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.
(5) Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.
Pacific City Financial Corporation and Subsidiary Average Balance, Average Yield, and Average Rate (Continued)($ in thousands)
Nine Months Ended (Unaudited) (Unaudited) 9/30/2018 9/30/2017 Interest Avg. Interest Avg. Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate Assets Interest-earning assets:Total loans (1)
$ 1,245,551 $ 55,749 5.98% $ 1,086,050 $ 44,684 5.50% U.S. government agency securities 23,887 432 2.42% 24,569 427 2.32% Mortgage-backed securities 67,602 1,183 2.34% 53,996 778 1.93% Collateralized mortgage obligation 52,519 913 2.32% 32,879 495 2.01%Municipal bonds (2)
6,454 120 2.49% 8,540 142 2.22% Other interest-earning assets 132,483 2,071 2.09% 73,614 870 1.58% Total interest-earning assets 1,528,496 60,468 5.29% 1,279,648 47,396 4.95% Noninterest-earning assets: Cash and cash equivalents 19,145 16,816 Allowance for loan losses (12,530 ) (11,357 ) Other assets 27,115 27,439 Total noninterest-earning assets 33,730 32,898 Total assets $ 1,562,226 $ 1,312,546 Liabilities and Shareholders’ Equity Interest-bearing liabilities: Deposits: NOW and money market accounts $ 282,221 2,367 1.12% $ 322,879 2,431 1.01% Savings 8,696 18 0.28% 8,874 18 0.27% Time deposits 747,102 9,716 1.74% 523,534 4,534 1.16% Total interest-bearing deposits 1,038,019 12,101 1.56% 855,287 6,983 1.09% Borrowings from Federal Home Loan Bank 36,557 475 1.74% 13,773 176 1.71% Total interest-bearing liabilities 1,074,576 12,576 1.56% 869,060 7,159 1.10% Noninterest-bearing liabilities Noninterest-bearing demand 319,697 300,360 Other liabilities 9,759 8,654 Total noninterest-bearing liabilities 329,456 309,014 Total liabilities 1,404,032 1,178,074 Total shareholders' equity 158,194 134,472 Total liabilities and shareholders’ equity $ 1,562,226 $ 1,312,546 Net interest income $ 47,892 $ 40,237 Net interest spread (3) 3.73% 3.85% Net interest margin (4) 4.19% 4.20% Total deposits $ 1,357,716 $ 12,101 1.19% $ 1,155,647 $ 6,983 0.81% Total funding (5) $ 1,394,273 $ 12,576 1.21% $ 1,169,420 $ 7,159 0.82%(1) Total loans include both loans held-for-sale and loans held-for-investment, net of deferred loan costs (fees).
(2) The yield on municipal bonds has not been computed on a tax-equivalent basis.
(3) Net interest spread is calculated by subtracting average rate on interest-bearing liabilities from average yield on interest-earning assets.
(4) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.
(5) Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.
View source version on businesswire.com: https://www.businesswire.com/news/home/20181023005396/en/
Pacific City Financial CorporationTimothy ChangExecutive Vice President & Chief Financial Officer213-210-2000
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