First Choice Bank Increases Capital in Second Quarter

Financial highlights

  • Total Common Equity increased to $87 million at June 30, 2015, up 49.7% from $58 million at March 31, 2015, and up 93.8% from $45 million a year ago at June 30, 2014, following a public offering of common stock in the quarter.
  • Total assets reached $718 million at June 30, 2015, up 5.5% from $680 million at March 31, 2015, and up 36.0% from $528 million a year ago at June 30, 2014.
  • Net Loans were $595 million at June 30, 2015, an increase of 7.6% from $553 million at March 31, 2015 and an increase of 42.4% from $418 million at June 30, 2014.
  • Total deposits were $615 million at June 30, 2015, an increase of 4.6% from $587 million at March 31, 2015 and an increase of 37.5% from $447 million at June 30, 2014.
  • $456,000 non-performing assets at June 30, 2015, compared to $296,000 non-performing assets at March 31, 2015, and $566,000 non-performing assets at June 30, 2014.
  • Common Equity Tier 1, Tier 1 Risk-Based Capital and total Risk-Based Ratios at 13.7%, 13.7% and 15.0%, compared to the well-capitalized requirements of 6.5%, 8% and 10%, respectively.

CERRITOS, Calif.--()--First Choice Bank, the “Bank” (OTCQX: FCBK), announced earnings for the first half of 2015 of $2.1 million.

During the quarter, and including $1.5 million which came in on July 1, 2015, the Bank raised $30.0 million (before costs) of Capital by the sale of 1,935,485 shares of common stock in a public offering, at a gross price of $15.50 per share. Capital ratios were strengthened at the quarter-end, with Tier 1 risk-based capital and total risk-based ratios at 13.7% and 15.0%, comparing favorably to the well capitalized requirements of 8% and 10%, respectively.

“Thanks to our recent Capital raise, we believe the Bank is very well-positioned to sustain our meaningful organic growth over the next few years,” said Peter Hui, Founder & Chairman of First Choice Bank.

Robert M. Franko, President and CEO of the Bank further commented, “This Quarter represented another strong growth period. We are pleased to see the meaningful recovery in the California economy, particularly in the Los Angeles, Orange County and San Diego markets, where we are seeing the most new business opportunities.”

Loans grew in the quarter to $604.7 million from $562.1 million at March 31, 2015. In order to accommodate the increase in the loan portfolio, the Bank provided $0.755 million to the Allowance for Loan and Lease Losses (the “ALLL”) in the quarter. At the quarter end, the ALLL stood at $9.6 million, or 1.60% of total loans. When combined with the amount of the discount on certain loans purchased in 2012, the ALLL and that discount amounted to 1.62% of the Bank’s total loans.

Earnings remained strong at $1.1 million for the quarter, the seventh quarter in a row where the Bank earned over $1 million.

The 30 days past due loans were $619,000, representing 0.10% of the total loan portfolio at the end of the quarter. In addition, there were two non-accrual loans in the amount of $456,000. One of the two non-accrual loans in the amount of $282,000 was brought fully current during the quarter, but the Bank’s customary accounting treatment in such circumstances is to continue to hold the loan on non-accrual until the loan has gone six (6) months with full performance. When that time has passed, if the loan has fully performed, it will be placed back on full accrual status. Another reported nonaccrual loan in the amount of $174,000 was fully guaranteed by the U.S. Government and in the month of July, the Bank received the funds from the SBA as the repurchase of the guaranteed portion. The $174,000 portion of that SBA loan was reflected as guaranteed, but non-accrual, as of the Quarter-end. Related to that same SBA Loan, there was a charge off during the quarter of $174,000 on the unguaranteed portion. There were no Troubled Debt Restructured loans and there was no Other Real Estate Owned.

At the quarter end, total assets were $717.7 million, a year to date increase of 14.6% over December 31, 2014, and a 36.0% increase over the same quarter in 2014; total net loans were $594.9 million, a year to date increase of 18.1% over December 31, 2014, and a 42.4% increase over the same quarter in 2014. In addition, at the quarter end, total deposits were $614.6 million, a year to date increase of 14.7% over December 31, 2014, and a 37.5% increase over the same quarter in 2014.

Total Capital at the quarter end was $86.8 million, a year to date increase of 54.3% over December 31, 2014, and a 93.8% increase over the same quarter in 2014. The Bank’s tangible book value per share at quarter-end was $12.76, after giving effect to the 4% stock dividend, effective as of April 15, 2015.

The Bank’s total investment portfolio at quarter end stood at $40.0 million, including $16.0 million in Held-to-Maturity status. With the $40.0 million investment portfolio, combined with cash and due from Banks of $67.9 million, the Bank’s total Liquidity stood at $107.9 million.

Income for the quarter was generated from Net Interest Income of $6.4 million, combined with Non-Interest Income of $1.1 million. Gain on the sale of loans, primarily the guaranteed portions of SBA loans, accounted for $0.7 million of the Non-Interest Income. Non-interest expense in the quarter was $4.8 million. The Net Interest Margin for the quarter and the year stood at 3.68% and 3.65%, respectively.

Selected Financial Highlights for the quarter ending June 30, 2015:

Net after Tax Income of $1.1 million.
Pre-Tax, Pre-Provision Income of $2.7 million.
Return on average equity annualized at 7.5%.
Allowance for Loan and Lease Losses at 1.60% of total loans.
Earnings Per Share for the Quarter were $0.19 (basic) and 0.19 (diluted).
Earnings Per Share annualized for the trailing twelve months as of the Quarter-end stood at $0.74 (basic) and $0.72 (diluted), taking into effect the full impact of the 4% stock dividend effective as of April 15, 2015, and the new shares issued as result of the public offering during the quarter.
Book Value and Tangible Book Value Per Share at $13.01 and $12.76 respectively.
Common Equity Tier 1, Tier 1 Risk-Based Capital and total Risk-Based Ratios at 13.7%, 13.7% and 15.0%, compared to 6.5%, 8% and 10%, respectively; which are the minimum levels required for a bank to be deemed “Well Capitalized” by the FDIC.

ABOUT FIRST CHOICE BANK

First Choice Bank, headquartered in Cerritos, California is a community focused financial institution, serving diverse consumers and commercial clients and specializing in loans to small businesses, Commercial and Industrial (C&I) loans, and commercial real estate loans with a niche in providing finance for the hospitality industry. The Bank is a Preferred Small Business Administration (SBA) Lender. The Bank recently started a private banking operation. Founded in 2005, First Choice Bank has quickly become a leading provider of financial services that enable our customers to grow, maintain strength, and reach unprecedented levels of success. We strive to surpass our clients' expectations through our efficiency and professionalism and are committed to being "First in Speed, Service, and Solutions." First Choice Bank stock is traded on the Over the Counter (OTCQX); our Ticker Symbol is FCBK.

The Bank's web site is www.FirstChoiceBankCA.com.

Forward Looking Statements

Except for the historical information in this news release, the matters described herein contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially. Such risks and uncertainties include: the credit risks of lending activities, including changes in the level and trend of loan delinquencies and charge-offs, results of examinations by our banking regulators, our ability to maintain adequate levels of capital and liquidity, our ability to manage loan delinquency rates, our ability to price deposits to retain existing customers and achieve low-cost deposit growth, manage expenses and lower the efficiency ratio, expand or maintain the net interest margin, mitigate interest rate risk for changes in the interest rate environment, competitive pressures in the banking industry, access to available sources of credit to manage liquidity, the local and national economic environment, and other risks and uncertainties. Accordingly, undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this release. First Choice Bank undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. Investors are encouraged to read the First Choice Bank annual reports which are available on our website.

                   
FIRST CHOICE BANK
SECOND QUARTER REPORT / JUNE 30, 2015
                         
BALANCE SHEET                        
(all amounts in thousand dollars except share and per share information)
 
June 30, 2015 March 31, 2015 December 31, 2014 June 30, 2014
      (unaudited)     (unaudited)     (audited)     (unaudited)
ASSETS
 
Cash and due from banks $67,912 $72,563 $69,001 $54,983
Investment securities 40,009 40,799 41,100 43,966
Stock Investments, restricted 3,236 2,971 2,970 2,970
 
Loans (gross) 604,680 562,080 512,212 425,221
Less : unaccreted disc. acquired loans (140) (160) (170) (547)
Less allowance for loan losses (9,642) (9,092) (8,501) (6,911)
Loans, net 594,898 552,828 503,541 417,763
 
Premises and equipment, net 1,554 1,524 1,538 986
Foreclosed assets 0 0 0 347
Other assets 10,062 9,568 8,323 6,567
$717,671 $680,253 $626,473 $527,582
                         
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Noninterest bearing deposits $78,965 $73,457 $64,362 $46,779
Interest checking accounts 269,896 239,392 205,462 117,039
NOW accounts 8,677 8,450 8,379 4,861
Money market accounts 40,340 43,964 45,355 46,767
Savings accounts 116,992 120,606 116,714 93,322
Certificates of deposits 99,777 101,511 95,845 138,134
Total Deposits 614,646 587,380 536,117 446,902
Federal Home Loan Bank Borrowings 12,000 31,000 32,000 35,000
Other liabilities 4,209 3,874 2,104 876
Total liabilities 630,855 622,254 570,221 482,778
 
Total shareholders' equity 86,816 57,999 56,252 44,804
$717,671 $680,253 $626,473 $527,582
                               
STATEMENT OF INCOME
For the three months ended For the six months ended
June 30, 2015 March 31, 2015 June 30, 2014 June 30, 2015 June 30, 2014
 
Interest income $7,924 $6,859 $5,391 14,783 10,336
Interest expense 1,513 1,272 991 2,786 1,863
Net interest income 6,411 5,587 4,400 11,997 8,473
Provision for loan losses 755 591 450 1,346 1,155
Net interest income after provision for loan losses 5,656 4,996 3,950 10,651 7,318
Noninterest income 1,072 1,036 933 2,109 2,014
Noninterest expense 4,810 4,336 3,135 9,147 5,841
Income before income taxes 1,918 1,696 1,748 3,613 3,491
Provision for income taxes 810 695 690 1,505 1,431
Net income $1,108 $1,001 $1,058 2,108 2,060
 
Net income per share-basic ¹ $0.19 $0.21 $0.27 $0.37 $0.52
Net income per share-diluted ¹ ² $0.19 $0.21 n/a $0.36 n/a
Weighted average shares - basic ¹ 5,725,950 4,694,002 3,965,993 5,725,950 3,965,993
Weighted average shares - diluted ¹ ² 5,848,228 4,810,957 n/a 5,848,228 n/a
Return on assets (annualized) 0.63% 0.63% 0.86% 0.63% 0.87%
Return on equity (annualized) 7.47% 6.98% 10.39% 7.23% 9.94%
Net interest margin 3.68% 3.57% 3.62% 3.65% 3.66%
Efficiency ratio 64.28% 65.48% 58.79% 64.84% 55.70%
                               
SELECTED RATIOS
June 30, 2015 March 31, 2015 December 31, 2014 June 30, 2014
Allowance for loan losses as a percent of total gross loans 1.60% 1.61% 1.66% 1.62%
Nonperforming assets as a percent of total assets 0.06% 0.04% 0.00% 0.11%
Loan to deposit ratio 96.79% 94.12% 93.92% 93.48%
Tier one leverage capital 12.30% 9.19% 8.95% 9.07%
Total risk based capital 15.00% 11.19% 11.23% 10.97%
                               

(1) Per common share data has been adjusted for the 4% stock dividend issued to shareholders on the record of April 15, 2015.

(2) Prior to 2014, First Choice Bank shares were not listed or quoted on an exchange. Accordingly, the calculation of diluted shares using the treasury method had not been made.

 

Contacts

First Choice Bank
Robert M. Franko, 562-345-9241
President & Chief Executive Officer
or
Yvonne L. Chen, 562-345-9244
Chief Financial officer

Contacts

First Choice Bank
Robert M. Franko, 562-345-9241
President & Chief Executive Officer
or
Yvonne L. Chen, 562-345-9244
Chief Financial officer