First Choice Bank Posts 37% YOY Increase in Q1 Net Income and Declares $0.20 Quarterly Cash Dividend

Financial highlights

  • Net Income for the first quarter of 2017 was $2.1 million, up 37.2% from $1.6 million in the same period last year, 2.8% lower than $2.2 million in the fourth quarter of 2016.
  • Bank announces second quarterly cash dividend of $0.20 for shareholders and sets 2017 annual meeting of shareholders.
  • Total assets reached $914.8 million at March 31, 2017, up 6.0% from $863.4 million at December 31, 2016, and up 12.8% from $811.1 million a year ago at March 31, 2016.
  • Net Loans were $731.8 million at March 31, 2017, up 5.6% from $692.7 million at December 31, 2016, and up 11.3% from $657.5 million a year ago at March 31, 2016.
  • Total deposits were $767.4 million at March 31, 2017, up 1.4% from $756.6 million at December 31, 2016, and up 10.6% from $693.7 million a year ago at March 31, 2016.
  • Total Common Equity increased to $102.7 million at March 31, 2017, up 1.2% from $101.4 million at December 31, 2016, and up 8.8% from $94.4 million a year ago at March 31, 2016.
  • Common Equity Tier 1, Tier 1 Risk-Based Capital and total Risk-Based Ratios were 13.3%, 13.3% and 14.5%, respectively, comparing very favorably to the well-capitalized requirements of 6.5%, 8% and 10%, respectively.

CERRITOS, Calif.--()--First Choice Bank, the “Bank” (OTCQX: FCBK), is pleased to continue to report strong earnings of $2.1 million for the first quarter of 2017.

Earnings were especially strong year over year, and this was the fourteenth quarter in a row where the Bank earned over $1 million, starting with the fourth quarter of 2013, and the fourth quarter in a row where the Bank earned over $2 million starting with the second quarter of 2016. In the first quarter of 2016, the Bank earned $1.6 million, so the increase in earnings compared to the first quarter of 2016 was 37.2%.

As announced previously, the Board of Directors declared the second quarterly 2017 cash dividend of $0.20 per share, payable on May 31, 2017 to shareholders of record on May 15, 2017. The Bank’s 2017 Annual Meeting of Shareholders will be held at the Cerritos Library-Skyline Room, 18025 Bloomfield Avenue, Cerritos, California on July 31, 2017. The record date for determination of shareholders entitled to vote at the annual meeting will be June 6, 2017. The purpose of the annual meeting will be the election of directors.

“2017 has started off well, with positive loan growth in the face of what appears to be a strengthening economy. Based on the Bank’s earnings, the Board has declared another 20 cent quarterly cash dividend. We value our shareholders and are pleased to continue this practice of returning a portion of the earnings as a cash dividend,” said Peter Hui, Founder & Chairman of First Choice Bank.

Capital ratios remained strong at the quarter-end, with Tier 1 risk-based capital and total risk-based ratios at 13.3% and 14.5%, comparing favorably to the well capitalized requirements of 8% and 10%, respectively.

The gross loans balance, at $743.3 million at March 31, 2017 was up from $669.8 million at March 31, 2016, and represented a year over year increase of 11.0%. Compared to the balance of $704.3 million at December 31, 2016, gross loans grew by 5.5% in the most recent quarter. There was no provision for loan losses for the first quarter of 2017. The Allowance for Loan and Lease Losses (the “ALLL”) stood at $11.5 million, or 1.6% of total loans, and 446.3% of all non-performing assets as of March 31, 2017.

There were no past due loans for the first quarter of 2017. Nonperforming assets decreased to $2.6 million or 0.3% of total assets as of March 31, 2017, compared to $3.9 million or 0.4% of total assets as of March 31, 2016. The decrease in nonperforming assets was due to a non-accrual loan payoff with a net charge-off of $76,200. At quarter-end, there were four non-accrual loans in the amount of $2.6 million. Included in the nonaccrual loans are four loans classified as Troubled Debt Restructured (“TDR”), which amounted to $2.6 million. Three TDR and non-accrual loans were paying as agreed under their modified terms. There was no Other Real Estate Owned.

SBA Loan production was very strong in the first quarter of 2017. In addition, the Bank was ranked in the top 100 most active SBA 7(a) Lenders in the United States in the SBA’s fiscal year 2016. Gain on sale premiums amounted to $1.2 million for the first quarter of 2017, primarily related to the sale of the guaranteed portions of SBA 7a loans. This represented an increase of 123.5% from the $0.5 million premiums realized in March 31, 2016.

Total assets were $914.8 million, a year over year increase of 12.8%, compared to the balance at March 31, 2016. In addition, total deposits were $767.4 million, a year over year increase of 10.6% compared to the balance at March 31, 2016.

Robert M. Franko, President and CEO of the Bank further commented, “Putting some of the uncertainty of 2016 behind us, this new year has started well. Loan growth, while episodic from month to month, continues to be positive. Deposit growth is also keeping pace, especially in the area of non-interest DDA growth. Our outstanding Team of bankers works together every day to help the Bank achieve its goals.”

Total Capital at the quarter-end was $102.7 million, a year over year increase of 8.8% compared to March 31, 2016. The Bank’s common book value per share and tangible book value per share were $14.28 and $14.28 respectively at quarter-end, following distribution of the $0.20 cash dividend in the quarter. This compared with $14.26 and $14.26 at December 31, 2016, and $13.28 and $13.28 in the year-ago period. Common book value per share at March 31, 2017, as compared to December 31, 2016 and March 31, 2016 was attributable to net income and stock issued for 2016 bonuses and options that were exercised, with an offset for the first quarter 2017 cash dividend.

The Bank’s total investment portfolio at quarter-end stood at $45.3 million, including $5.7 million in the Bank’s Held-to-Maturity portfolio. Cash and due from banks was $119.8 million, including Agreement to resell of $3.46 million.

At the quarter-end, total deposits were $767.4 million, of which $197.7 million, 25.8% of total deposits was in non-interest bearing checking accounts. The Bank’s Net Loan to Deposit ratio was 95.4% at March 31, 2017. Federal Home Loan Bank of San Francisco advances totaled $40 million as of March 31, 2017.

Net Interest Income totaled $7.6 million and net interest margin stood at 3.61% for the first quarter of 2017, compared to $7.5 million and 3.66% for the fourth quarter of 2016. The decrease in net interest margin was 5 basis points primarily due to $11 million residential mortgage loan early payoffs, which resulted in the immediate amortization of purchase premium.

Non-Interest Income totaled $1.5 million for the first quarter of 2017. Gain on the sale of loans, primarily the guaranteed portions of SBA loans, accounted for $1.2 million of the Non-Interest Income. Non-interest expense continued to be well-controlled, and was $5.5 million in the quarter. The Bank’s efficiency ratio was 60.4% at quarter-end, compared to 59.1% at March 31, 2016.

Selected Financial Highlights for the Quarter ending March 31, 2017:

Net after Tax Income of $2.1 million.
Pre-Tax, Pre-Provision Income of $3.6 million.
Return on average assets annualized at 1.0%.
Return on average tangible common equity annualized at 8.3%.
Allowance for Loan and Lease Losses at 1.55% of total gross loans, and 446.4% of all non-performing assets.
Earnings Per Share for the quarter at $0.30 (basic) and $0.30 (diluted).
Earnings Per Share annualized at $1.21 (basic) and $1.19 (diluted).
Book Value and Tangible Book Value Per Share at $14.28 and $14.28 respectively.
Tier 1 Leverage Ratio, Common Equity Tier 1, Tier 1 Risk-Based Capital and total Risk-Based Ratios at 11.9%, 13.3%, 13.3% and 14.5%, compares very favorably to 5%, 6.5%, 8% and 10%, which are the respective minimum required ratios for a bank to be deemed “Well-Capitalized” by the FDIC. Capital conservation buffer was 6.5%, well above the dividend payout restriction of 0.625% and 2.5% requirements in 2017 transition period and 2019 fully effective limit.

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, Private Banking clients, 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. 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            
FIRST QUARTER REPORT / MARCH 31, 2017
                   
BALANCE SHEET                  
(all amounts in thousand dollars except share and per share information)

March 31, 2017

December 31, 2016

March 31, 2016

      (unaudited)     (audited)     (unaudited)
ASSETS                  
 
Cash and due from banks $ 119,762 $ 110,032 $ 97,086
Investment securities 45,316 41,465 40,335
Stock Investments, restricted 3,765 3,765 3,238
 
Loans (gross) 743,287 704,345 669,806
Less allowance for loan losses   (11,523 )   (11,599 )   (12,315 )
Loans, net 731,764 692,746 657,490
 
Premises and equipment, net 975 1,036 1,328
Other assets   13,259     14,412     11,583  
TOTAL ASSETS $ 914,841   $ 863,455   $ 811,059  
                   
LIABILITIES AND SHAREHOLDERS' EQUITY                  
 
Noninterest bearing deposits $ 197,672 $ 150,764 $ 106,771
Interest checking accounts 260,748 265,381 257,253
Money market accounts 78,659 92,309 107,658
Savings accounts 92,209 89,139 91,158
Certificates of deposits   138,148     158,968     130,900  
Total Deposits 767,436 756,561 693,739
Federal Home Loan Bank borrowings 40,000 0 18,000
Other liabilities   4,713     5,447     4,970  
Total liabilities 812,149 762,007 716,708
 
Total shareholders' equity   102,691     101,447     94,351  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 914,841   $ 863,455   $ 811,059  
                   
STATEMENT OF INCOME                  
For the three months ended
March 31, 2017 December 31, 2016 March 31, 2016
 
Interest income $ 9,064 $ 9,146 $ 9,064
Interest expense   1,436     1,646     1,416  
Net interest income 7,628 7,499 7,648
Provision for loan losses   0     0     900  
Net interest income after provision for loan losses 7,628 7,499 6,748
Noninterest income 1,471 1,066 1,089
Noninterest expense   5,493     4,820     5,187  
Income before income taxes 3,607 3,745 2,650
Provision for income taxes   1,472     1,547     1,094  
NET INCOME $ 2,135   $ 2,198   $ 1,556  
 
Dividends declared per common share 0.20 0.00 0.00
Net income per share-basic ¹ $ 0.30 $ 0.31 $ 0.22
Net income per share-diluted ¹ ² $ 0.30 $ 0.31 $ 0.22
Weighted average shares - basic ¹ 7,081,065 7,001,249 6,980,506
Weighted average shares - diluted ¹ ² 7,170,439 7,075,977 7,057,896
Return on assets (annualized) 1.0 % 1.07 % 0.77 %
Return on equity (annualized) 8.33 % 8.69 % 6.64 %
Net interest margin 3.61 % 3.66 % 3.82 %
Efficiency ratio 60.36 % 56.27 % 59.37 %
                   
SELECTED RATIOS                  

March 31, 2017

December 31, 2016

March 31, 2016

Book value $ 14.28 $ 14.26 $ 13.28
Tangible book value³ $ 14.28 $ 14.26 $ 13.28
Allowance for loan losses as a percent of total gross loans 1.55 % 1.65 % 1.84 %
Nonperforming assets as a percent of total assets 4 0.28 % 0.39 % 0.48 %
Allowance for loan losses as a percent of nonperforming assets 446.35 % 346.33 % 319.47 %
Net Loan to deposit ratio 95.35 % 91.57 % 94.77 %
Tier one leverage capital 11.88 % 12.42 % 11.67 %
Total risk based capital 14.54 % 15.33 % 14.74 %
                   
(1) Per common share data has been adjusted for the 4% stock dividend issued to shareholders on the record of May 26,2016
(2) Diluted shares are calculated using the treasury method since Q1 2015.
(3) Tangible book value per share excludes goodwill and intangible assets
(4) Nonperforming assets include nonaccrual loans, loans past due 90 days or more and still accruing, and other real estate owned.
 

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