LOS ANGELES--(BUSINESS WIRE)--Pacific City Financial Corporation (the “Company”) (OTC Pink: PFCF), the holding company of Pacific City Bank, today reported net income of $4.9 million, or $0.36 per diluted common share, compared with $4.4 million, or $0.33 per diluted common share, in the previous quarter and $3.2 million, or $0.27 per diluted common share, in the year-ago quarter. Year-to-date net income totaled $9.3 million, or $0.68 per diluted common share, in the six months period of 2017 compared with $6.2 million, or $0.52 per diluted common shares, in the same period of 2016.
2017 Second Quarter Highlights
- Net income totaled $4.9 million or $0.36 per diluted common share
- Total assets increased $247.0 million, or 22.1%, to $1,363.1 million at June 30, 2017 compared with $1,116.1 million at June 30, 2016
- Total loans, including loans held-for-sale and net of unearned fee/cost, increased $122.4 million, or 12.7% to $1,089.5 million at June 30, 2017 compared with $967.1 million at June 30, 2016
- Total deposits increased $175.6 million, or 17.5%, to $1,178.2 million at June 30, 2017 compared with $1,002.6 million at June 30, 2016
- ROAA – 1.49%, ROAE – 14.49%
- Declared quarterly cash dividend of $0.03 per common share
- Announced Henry Kim to Succeed as President and CEO in 2018
"We are pleased to announce another strong quarterly financial result. Our net income in the second quarter of 2017 increased to $4.9 million compared with $4.4 million in the previous quarter and $3.2 million in the year-ago quarter,” said Haeyoung Cho, President and CEO. “As part of our Bi-Coastal expansion strategy we are in the process of opening a full-service branch in Bayside, New York, in September of this year. Bayside branch will be our second branch in the East Coast that will complement our Fort Lee, New Jersey, branch. I am delighted by our board of directors’ unanimously decision to appointed Henry Kim, one of the founding members of Pacific City Bank, to succeed me at the end of 2017. I am certain that Henry’s leadership will continue the tradition and culture of exceptional personal service and focus on long-term shareholders benefits.”
| 2017 Second Quarter Financial Highlights | |||||||||||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||||||
| At or for the Three Months Ended | |||||||||||||||||||
|
Jun. 30, 2017 |
Mar. 31,
2017 |
%
change |
Jun. 30,
2016 |
%
change |
|||||||||||||||
| Net income | $ | 4,860 | $ | 4,397 | 10.5 | % | $ | 3,223 | 50.8 | % | |||||||||
| Earnings per common share (diluted)* | 0.36 | 0.33 | 9.1 | % | 0.27 | 33.3 | % | ||||||||||||
| Net interest income | $ | 13,384 | $ | 12,470 | 7.3 | % | $ | 10,914 | 22.6 | % | |||||||||
| (Reversal) Provision for loan loss | (274 | ) | (198 | ) | 38.4 | % | 369 | -174.3 | % | ||||||||||
| Non-interest income | 3,577 | 3,488 | 2.6 | % | 2,988 | 19.7 | % | ||||||||||||
| Non-interest expense | 8,791 | 8,520 | 3.2 | % | 7,929 | 10.9 | % | ||||||||||||
| Total assets | $ | 1,363,130 | $ | 1,286,432 | 6.0 | % | $ | 1,116,125 | 22.1 | % | |||||||||
| Loans receivable, net of allowance and loan fee/cost | 1,068,620 | 1,042,879 | 2.5 | % | 925,592 | 15.5 | % | ||||||||||||
| Total deposits | 1,178,211 | 1,146,262 | 2.8 | % | 1,002,610 | 17.5 | % | ||||||||||||
| Return on average assets | 1.49 | % | 1.43 | % | 1.20 | % | |||||||||||||
| Return on average stockholders' equity | 14.49 | % | 13.77 | % | 12.38 | % | |||||||||||||
| Net interest margin | 4.20 | % | 4.13 | % | 4.16 | % | |||||||||||||
| Efficiency ratio | 51.83 | % | 53.38 | % | 57.04 | % | |||||||||||||
| Tangible common equity to tangible assets | 9.97 | % | 10.21 | % | 9.44 | % | |||||||||||||
| Tangible common equity per common share * | $ | 10.14 | $ | 9.79 | $ | 8.80 | |||||||||||||
| Tier 1 leverage ratio (consolidated) | 10.38 | % | 10.45 | % | 9.64 | % | |||||||||||||
| * 10% stock dividend effected on December 30, 2016 reflected retroactively. | |||||||||||||||||||
RESULTS OF OPERATIONS
Net Income
Net income in the second quarter of 2017 increased $463,000, or 10.5%, to $4.9 million compared with $4.4 million in the previous quarter and increased $1.6 million, or 50.8%, compared with $3.2 million in the year-ago quarter. Diluted earnings per share were $0.36 in the second quarter of 2017 compared with $0.33 in the previous quarter and $0.27 in the year-ago quarter. Net income for the first six months of 2017 increased $3.0 million, or 49.1%, to $9.3 million compared with $6.2 million for the first six months of 2016. Diluted earnings per share for the six month ended June 30, 2017 was $0.68 compared with $0.52 for the six month ended June 30, 2016.
Net Interest Income and Net Interest Margin
Net interest income before provision for loan losses in the second quarter of 2017 increased $914,000 or 7.3%, to $13.4 million compared with $12.5 million in the previous quarter, and increased $2.5 million, or 22.6%, compared with $10.9 million in the year-ago quarter. Net interest income before provision for loan losses for the first six months of 2017 increased $4.2 million, or 19.6%, to $25.9 million compared with $21.6 million for the first six months of 2016. The increases in net interest income compared with the previous quarter and for the first six months of 2016 were primarily due to an increase in interest-earning assets and increases in Wall Street Journal Prime rate since December 2016.
Interest income on loans increased $930,000, or 6.7%, to $14.8 million in the second quarter of 2017 compared with $13.9 million in the previous quarter and increased $2.8 million, or 23.7%, compared with $12.0 million in the year-ago quarter. The increases compared with the previous quarters were primarily due to an increase in average loan balance and increases in loan yield. The average total loan balance, including loans held for sale, was $1,077.8 million in the second quarter of 2017 compared with $1,055.8 million in the previous quarter, and $925.8 million in the year-ago quarter. Interest income on loans for the first six months of 2017 increased $5.1 million, or 21.5%, to $28.7 million compared with $23.6 million for the first six months of 2016.
The loan yield increased 18 basis points to 5.51% in the second quarter of 2017 compared with 5.33% in the previous quarter, and increased 31 basis points compared with 5.20% in the year-ago quarter. The increases compared with the previous quarters were primarily due to the “asset sensitive” nature of the balance sheet where the variable interest rate loans repriced to higher rates as a result of three 0.25% increases in Wall Street Journal Prime rate since December 2016.
Below is a table of fixed and variable interest rate loans accompanied by weighted average contractual rates:
| June 30, 2017 | March 31, 2017 | June 30, 2016 | ||||||||||||||||||||||
|
% to Gross
Loans * |
WAVG
Contractual Rate |
% to Gross
Loans * |
WAVG
Contractual Rate |
% to Gross
Loans * |
WAVG
Contractual Rate |
|||||||||||||||||||
| Fixed rate loans | 28.1 | % | 5.09 | % | 29.3 | % | 5.11 | % | 33.7 | % | 5.11 | % | ||||||||||||
| Variable rate loans | 71.9 | % | 5.16 | % | 70.7 | % | 4.92 | % | 66.3 | % | 4.48 | % | ||||||||||||
| * Including LHFS | ||||||||||||||||||||||||
The interest income on investment securities increased $80,000, or 15.7%, to $588,000 compared with $508,000 in the previous quarter and increased $148,000, or 33.6% compared with $440,000 in the year-ago quarter. The increases compared with the previous quarters were primarily due to the increase in investment portfolio balance and increase in investment yield. The average balance of investment securities was $115.3 million in the second quarter of 2017 compared with $104.3 million in the previous quarter, and $96.5 million in the year-ago quarter. Investment yield increased 9 basis points to 2.04% compared with 1.95% in the previous quarter, and increased 22 basis points compared with 1.82% in the year-ago quarter primarily due to the purchase of higher yielding securities. The interest income on investment securities for the first six months of 2017 increased $150,000, or 15.9% to $1.1 million compared with $946,000 for the first six months of 2016.
Total interest expense in the second quarter of 2017 increased $158,000, or 7.4%, to $2.3 million compared with $2.1 million in the previous quarter and increased $672,000, or 41.2%, compared with $1.6 million in the year-ago quarter. The increase was primarily due to an increase in average balance of interest bearing deposits and an increase in cost of deposit. The average balance of interest bearing deposits was $856.0 million in the second quarter of 2017 compared with $839.4 million in the previous quarter, and $695.8 million in the year-ago quarter. The cost of interest-bearing deposits was 1.08% in the second quarter of 2017 compared with 1.04% in the previous quarter, and 0.94% in the year-ago quarter.
The cost of funds including non-interest bearing deposits was 0.80% in the second quarter of 2017 compared with 0.78% in the previous quarter, and 0.68% in the year-ago quarter. Total interest expense for the first of six months of 2017 increased $1.3 million, or 39.1% to $4.5 million compared with $3.2 million for the first of six months of 2016.
Net interest margin was 4.20% in the second quarter of 2017 compared with 4.13% in the previous quarter, and 4.16% in the year-ago quarter. Year-to-date net interest margin was 4.17% for the first six months of 2017 compared with 4.18% for the first six months of 2016. The primary reason for the 2017 year-to-date decrease of 1 bps in net interest margin compared with the same period in 2016 was due to a $44.9 million increase in average balance of lower yielding Fed Funds sold to $63.7 million compared with $18.8 million for the first six months of 2016 and an increase in cost of interest bearing deposits.
Loan Loss Provision
The provision for loan losses in the second quarter of 2017 was a reversal of $274,000 compared with a reversal of $198,000 in the previous quarter, and a provision of $369,000 in the year-ago quarter. The reversal in the second quarter of 2017 was primarily due to a favorable decrease in historical loss rate, partially offset by an increase in general reserve requirement attributed to loan balance growth and a charge-off of $240,000. The allowance for loan losses to gross loan ratio was 1.02% on June 30, 2017 compared with 1.07% on March 31, 2017 and 1.09% on June 30, 2016. For the first six months of 2017, the Company recognized a negative provision for loan losses of $472,000 compared with a provision of $860,000 for the first six months of 2016.
During the second quarter of 2017, the Company recognized a net charge-off of $12,000 compared with a net recovery of $193,000 in the previous quarter, and a net charge-off of $125,000 in the year ago-quarter.
Non-interest Income
Non-interest income in the second quarter of 2017 increased $89,000, or 2.6%, to $3.6 million compared with $3.5 million in the previous quarter, and increased $589,000, or 19.7%, compared with $3.0 million in the year-ago quarter. The increase compared to the year-ago quarter was primarily due to an increase of $543,000 in gain on sale of SBA and residential home mortgage loans to $2.4 million compared with $1.8 million. Non-interest income for the first six months of 2017 increased $1.1 million, or 18.6%, to $7.1 million compared with $6.0 million for the first six months of 2016 primarily due to an increase of $1.1 million in gain on sale of SBA and residential home mortgage loans.
The Bank originated $42.0 million in SBA loans and sold $32.2 million in the second quarter of 2017 compared with $61.1 million in origination and $36.4 million sold during the previous quarter, and $47.4 million in origination and $19.8 million sold during the year-ago quarter. The Bank originated $15.4 million in residential mortgage loans and sold $3.7 million in the second quarter of 2017 compared with $15.4 million in origination and $2.7 million sold in the previous quarter and $25.1 million in origination and $14.9 million sold in the year-ago quarter.
Non-interest Expenses
Non-interest expenses in the second quarter of 2017 increased $271,000, or 3.2%, to $8.8 million compared with $8.5 million in the previous quarter and increased $862,000, or 10.9%, compared with $7.9 million in the year-ago quarter. The increase compared with the previous quarter was primarily due to an increase of $104,000 in marketing expenses, an increase of $71,000 in legal and professional fees, and an increase of $53,000 in salary and employee benefit expenses. The increase compared with the year-ago quarter was primarily due to an increase of $638,000 in salary and employee benefit expenses related to an increase in employee headcount and an increase in bonus and incentive accrual, and an increase of $88,000 in marketing expenses. Non-interest expenses for the first six months of 2017 increased $1.4 million, or 8.8%, to $17.3 million compared with $15.9 million for the first six months of 2016 primarily due to an increase of $1.4 million in salary and employee benefits expenses resulting from increases in headcount and employees’ bonus and incentive and an increase in employee group insurance expenses.
The Company’s efficiency ratio was 51.83% in the second quarter of 2017 compared with 53.38% in the previous quarter, and 57.04% in the year-ago quarter. The Company’s efficiency ratio for the first six months of 2017 was 52.58% compared with 57.71% for the first six months of 2016.
Income Tax Provision
The Company’s effective income tax rate was 42.44% in the second quarter of 2017 compared with 42.41% in the previous quarter and 42.49% in the year-ago quarter. The Company’s effective income tax rate for the first six months of 2017 was 42.43% compared with 42.49% for the first six months of 2016.
BALANCE SHEET SUMMARY
Total Assets
Total assets at June 30, 2017 increased $76.7 million, or 6.0%, to $1,363.1 million compared with $1,286.4 million at March 31, 2017, and increased $247.0 million, or 22.1%, compared with $1,116.1 million at June 30, 2016.
Loans
Total loans receivable including loan held-for-sale, net of deferred costs and fees, increased $22.5 million, or 2.1%, to $1,089.5 million at June 30, 2017 compared with $1,067.0 million at March 31, 2017, and increased $122.4 million, or 12.7%, compared with $967.1 million at June 30, 2016.
During the second quarter of 2017, the Company originated $125.9 million in loans, sold $32.2 million in SBA guaranteed portion of the loans and $3.7 million in residential mortgage loans, recognized $24.9 million in loan principal paydown/payoff, and charged-off $242,000. During the first quarter of 2017, the Company originated $151.1 million in loans, sold $36.49 million in SBA guaranteed portion of the loans and $2.7 million in residential mortgage loans, recognized $26.6 million in loan principal paydown/payoff, and charged-off $18,000.
The following table illustrates details of gross loan balance by type:
| Loan type (dollars in thousands) | ||||||||||||||||
|
Jun. 30,
2017 |
Mar. 31,
2017 |
Percentage
Change |
Jun. 30,
2016 |
Percentage
Change |
||||||||||||
| Real estate loans | $ | 629,307 | $ | 615,887 | 2.2 | % | $ | 550,145 | 14.4 | % | ||||||
| Residential mortgage loans | 143,117 | 142,719 | 0.3 | % | 129,992 | 10.1 | % | |||||||||
| SBA loans | 145,146 | 139,236 | 4.2 | % | 122,833 | 18.2 | % | |||||||||
| Commercial industrial loans | 129,109 | 122,325 | 5.5 | % | 101,189 | 27.6 | % | |||||||||
| Consumer loans | 32,375 | 33,617 | -3.7 | % | 31,164 | 3.9 | % | |||||||||
| Deferred loan fees/costs | 595 | 410 | 45.1 | % | 455 | 30.8 | % | |||||||||
| Gross loans receivables | 1,079,649 | 1,054,194 | 2.4 | % | 935,778 | 15.4 | % | |||||||||
| Loans held for sale | 9,888 | 12,847 | -23.0 | % | 31,337 | -68.4 | % | |||||||||
| Total loans | $ | 1,089,537 | $ | 1,067,041 | 2.1 | % | $ | 967,115 | 12.7 | % | ||||||
Investment Securities
Total investment securities at June 30, 2017 increased $19.3 million, or 17.6%, to $128.7 million compared with $109.4 million at March 31, 2017, and increased $39.9 million, or 44.9%, compared with $88.8 million at June 30, 2016. The increase in investment securities portfolio compared with the previous quarter was primarily due to the purchase of $24.7 million in investment securities, partially offset by $4.4 million in principal pay-downs, $185,000 in net premium amortization, and $8,000 decrease in fair market value.
Deposits
Total deposit balance increased $31.9 million, or 2.8%, to $1,178.2 million at June 30, 2017 compared with $1,146.3 million at March 31, 2017, and increased $175.6 million, or 17.5%, compared with $1,002.6 million at June 30, 2016. The demand deposit to total deposit ratio was 27.1% at June 30, 2017 compared with 26.1% at March 31, 2017, and 27.1% at June 30, 2016.
The table below consists of deposit mix by period:
| Deposit mix (Dollars in thousands) | |||||||||||||||||||
| June 30, 2017 | March 31, 2017 | June 30, 2016 | |||||||||||||||||
| Amount | Percentage | Amount | Percentage | Amount | Percentage | ||||||||||||||
| Demand deposits | $ | 318,900 | 27.1 | % | $ | 298,563 | 26.0 | % | $ | 271,700 | 27.1 | % | |||||||
| Now accounts | 9,195 | 0.8 | % | 9,655 | 0.8 | % | 8,204 | 0.8 | % | ||||||||||
| Money market accounts | 317,410 | 26.9 | % | 313,212 | 27.3 | % | 226,090 | 22.6 | % | ||||||||||
| Savings | 8,668 | 0.7 | % | 8,382 | 0.7 | % | 11,722 | 1.2 | % | ||||||||||
| Time deposits under $250K | 267,655 | 22.7 | % | 257,660 | 22.5 | % | 236,253 | 23.6 | % | ||||||||||
| Time deposits of $250K and over | 143,877 | 12.2 | % | 132,724 | 11.6 | % | 111,225 | 11.1 | % | ||||||||||
| State & Broker CDs | 112,506 | 9.5 | % | 126,066 | 11.0 | % | 137,416 | 13.7 | % | ||||||||||
| Total deposits | $ | 1,178,211 | 100.0 | % | $ | 1,146,262 | 100.0 | % | $ | 1,002,610 | 100.0 | % | |||||||
Borrowings
The Company had $40.0 million in borrowings from Federal Home Loan Bank (FHLB) as of June 30, 2017 and none on March 31, 2017 and June 30, 2016. The FHLB borrowings consist of fixed interest rate with maturity terms ranging from one year to five years.
Stockholders’ Equity
The Stockholders’ equity increased $4.6 million to $136.0 million at June 30, 2017 compared with $131.3 million at March 31, 2017, and increased $30.6 million compared with $105.4 million at June 30, 2016. On May 3, 2017, the Company declared a cash dividend of $0.03 per common share that was paid on June 15, 2017.
CREDIT QUALITY
Non-performing Assets
Non-performing loans (“NPL”) balance at June 30, 2017 decreased $258,000, or 15.2%, to $1.4 million compared with $1.7 million at March 31, 2017, and decreased $788,000, or 35.3%, compared with $2.2 million at June 30, 2016. Non-performing loans to gross loans ratios were 0.13% at June 30, 2017 compared with 0.16% at March 31, 2017 and 0.24% at June 30, 2016.
OREO balance decreased $296,000 to $209,000 at June 30, 2017 compared with $505,000 at March 31, 2017 and decreased $297,000 compared with $506,000 at June 30, 2016. The decrease was primarily due to the sale of one OREO during the second quarter of 2017.
The following tables summarize composition of non-performing loans and non-performing assets:
| Non-performing loans composition (Dollars in thousands) | ||||||||||||||||
|
Jun. 30,
2017 |
Mar. 31,
2017 |
Percentage
Change |
Jun. 30,
2016 |
Percentage
Change |
||||||||||||
| Real estate loans | $ | 338 | $ | 51 | 562.7 | % | $ | 69 | 389.9 | % | ||||||
| Commercial and industrial loans | 169 | 244 | -30.7 | % | 609 | -72.2 | % | |||||||||
| SBA loans | 932 | 1,357 | -31.3 | % | 1,546 | -39.7 | % | |||||||||
| Consumer loans & others | 3 | 48 | -93.8 | % | 6 |
-50.0 |
% | |||||||||
| $ | 1,442 | $ | 1,700 | -15.2 | % | $ | 2,230 | -35.3 | % | |||||||
| Non-performing assets (Dollars in thousands) | |||||||||||||||||||
|
Jun. 30,
2017 |
Mar. 31,
2017 |
%
Change |
Jun. 30,
2016 |
%
Change |
|||||||||||||||
| Non-performing loans (NPL) | $ | 1,442 | $ | 1,700 | -15.2 | % | $ | 2,230 | -35.3 | % | |||||||||
| Non-performing TDR (included in NPL) | 695 | 597 | 16.4 | % | 1,284 | -45.9 | % | ||||||||||||
| Gross loans including deferred loan fees/cost | 1,079,649 | 1,054,194 | 2.4 | % | 935,778 | 15.4 | % | ||||||||||||
| NPL/Gross loans | 0.13 | % | 0.16 | % | 0.24 | % | |||||||||||||
| OREO | $ | 209 | $ | 505 | -58.6 | % | $ | 506 | -58.7 | % | |||||||||
| Performing TDR | 1,704 | 1,790 | -4.8 | % | 2,301 | -25.9 | % | ||||||||||||
| NPA (NPL+OREO) | 1,651 | 2,205 | -25.1 | % | 2,736 | -39.7 | % | ||||||||||||
| Total assets | $ | 1,363,130 | $ | 1,286,432 | 6.0 | % | $ | 1,116,125 | 22.1 | % | |||||||||
| NPA (NPL+OREO)/Gross loans | 0.15 | % | 0.21 | % | 0.29 | % | |||||||||||||
| NPA (NPL+OREO)/Total assets | 0.12 | % | 0.17 | % | 0.25 | % | |||||||||||||
Classified Assets
Classified loans decreased $2.5 million, or 28.3%, to $6.4 million compared with $8.9 million at March 31, 2017 and decreased $683,000, or 9.7%, compared with $7.0 million at June 30, 2016. Classified assets to total assets ratio was 0.48% at June 30, 2017 compared with 0.73% at March 31, 2017 and 0.68% at June 30, 2016.
The following tables provide certain details on classified loans and classified assets.
| Classified loans (Dollars in thousands) | |||||||||||||||
|
Jun. 30, 2017 |
Mar. 31,
2017 |
Percentage
Change |
Jun. 30, 2016 |
Percentage
Change |
|||||||||||
| Substandard (Classified) | $ | 6,351 | $ | 8,852 | -28.3 | % | $ | 7,034 | -9.7 | % | |||||
| Special mention | 5,706 | 5,742 | -0.6 | % | 6,831 | -16.5 | % | ||||||||
| Total criticized | 12,057 | 14,594 | -17.4 | % | 13,865 | -13.0 | % | ||||||||
| Watch | 8,565 | 8,627 | -0.7 | % | 15,006 | -42.9 | % | ||||||||
| Total problem loans | $ | 20,622 | $ | 23,221 | -11.2 | % | $ | 28,871 | -28.6 | % | |||||
| Classified assets (Dollars in thousands) | ||||||||||||||||||
|
Jun. 30,
2017 |
Mar. 31,
2017 |
%
Change |
Jun. 30,
2016 |
%
Change |
||||||||||||||
| Classified assets | $ | 6,559 | $ | 9,357 | -29.9 | % | $ | 7,540 | -13.0 | % | ||||||||
| Classified loans/Gross loans | 0.59 | % | 0.84 | % | 0.75 | % | ||||||||||||
| Tier 1 + ALLL | $ | 146,458 | $ | 142,113 | 3.1 | % | $ | 114,338 | 28.1 | % | ||||||||
| Classified assets/Tier 1 + ALLL | 4.48 | % | 6.58 | % | 6.59 | % | ||||||||||||
| Classified assets/Total assets | 0.48 | % | 0.73 | % | 0.68 | % | ||||||||||||
Capital
The following table illustrates Pacific City Bank capital ratios:
| Capital Ratios | ||||||||||
| June 30, 2017 | March 31, 2017 | June 30, 2016 | ||||||||
| Tier 1 Leverage Capital Ratio (Bank) | 10.31 | % | 10.39 | % | 9.53 | % | ||||
| Common Equity Tier 1 Capital Ratio (Bank) | 12.56 | % | 12.49 | % | 11.39 | % | ||||
| Tier 1 Risk-Based Capital Ratio (Bank) | 12.56 | % | 12.49 | % | 11.39 | % | ||||
| Total Risk-Based Capital Ratio (Bank) | 13.60 | % | 13.59 | % | 12.53 | % | ||||
About Pacific City Financial Corporation
Headquartered in Los Angeles, California, Pacific City Financial Corporation is the parent company of Pacific City Bank, a full-service commercial bank with twelve branch offices and ten loan production offices in Lynwood and Bellevue, Washington; Denver, Colorado, Chicago, Illinois; Annandale, Virginia; Atlanta, Georgia; Orange County, California; Bayside, New York; Los Angeles, California; and Carrollton, Texas. Pacific City Bank specializes in commercial banking for small to medium-size businesses by providing commercial real estate loans, small business loans and lines of credit, trade finance loans, auto loans, residential mortgage loans, and SBA loans. Pacific City Bank serves a diverse customer base through its branches in the Greater Los Angeles Area and Fort Lee, New Jersey and its Loan Production Offices in eight States.
Safe Harbor Statement
This press release may contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from the projected, including descriptions of plans or objectives of its management for future operations, products or services, and forecasts of its revenues, earnings or other measures of economic performance. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.”
| Pacific City Financial Corporation | ||||||||||||||||||||
| Consolidated Balance Sheets (Unaudited) | ||||||||||||||||||||
| (Dollars In thousands) | ||||||||||||||||||||
|
June 30,
2017 |
March 31,
2017 |
%
change |
June 30,
2016 |
%
change |
||||||||||||||||
| Assets | ||||||||||||||||||||
| Cash and due from banks | $ | 22,591 | $ | 16,085 | 40.4 | % | $ | 14,746 | 53.2 | % | ||||||||||
| Interest-bearing deposits in financial institutions | 99,035 | 72,509 | 36.6 | % | 21,641 | 357.6 | % | |||||||||||||
| Total cash and cash equivalents | 121,626 | 88,594 | 37.3 | % | 36,387 | 234.3 | % | |||||||||||||
| Investment securities, available-for-sale | 110,015 | 90,370 | 21.7 | % | 72,236 | 52.3 | % | |||||||||||||
| Investment securities, held-to-maturity | 18,663 | 19,024 | -1.9 | % | 16,548 | 12.8 | % | |||||||||||||
| Total investment securities | 128,678 | 109,394 | 17.6 | % | 88,784 | 44.9 | % | |||||||||||||
| Loans held for sale | 9,888 | 12,847 | -23.0 | % | 31,337 | -68.4 | % | |||||||||||||
| Loans receivable, net of deferred loan costs (fees) | 1,079,649 | 1,054,194 | 2.4 | % | 935,778 | 15.4 | % | |||||||||||||
| Less: allowance for loan losses | (11,029 | ) | (11,315 | ) | -2.5 | % | (10,186 | ) | 8.3 | % | ||||||||||
| Net loans receivables | 1,068,620 | 1,042,879 | 2.5 | % | 925,592 | 15.5 | % | |||||||||||||
| Premises and equipment, net | 4,317 | 4,370 | -1.2 | % | 3,403 | 26.9 | % | |||||||||||||
| Other real estate owned, net | 209 | 505 | -58.6 | % | 506 | -58.7 | % | |||||||||||||
| Federal Home Loan Bank and other bank stock | 6,589 | 5,686 | 15.9 | % | 5,686 | 15.9 | % | |||||||||||||
| Deferred tax assets, net | 5,791 | 5,536 | 4.6 | % | 6,182 | -6.3 | % | |||||||||||||
| Servicing assets | 8,801 | 8,637 | 1.9 | % | 7,635 | 15.3 | % | |||||||||||||
| Accrued interest receivables | 3,519 | 3,264 | 7.8 | % | 2,756 | 27.7 | % | |||||||||||||
| Others | 5,092 | 4,720 | 7.9 | % | 7,857 | -35.2 | % | |||||||||||||
| Total assets | $ | 1,363,130 | $ | 1,286,432 | 6.0 | % | $ | 1,116,125 |
|
22.1 | % | |||||||||
| Liabilities | ||||||||||||||||||||
| Deposits | ||||||||||||||||||||
| Noninterest-bearing demand | $ | 318,901 | $ | 298,563 | 6.8 | % | $ | 271,700 | 17.4 | % | ||||||||||
| Savings, NOW, and money market accounts | 335,272 | 331,248 | 1.2 | % | 246,016 | 36.3 | % | |||||||||||||
| Time deposits under $250,000 | 280,161 | 283,726 | -1.3 | % | 294,969 | -5.0 | % | |||||||||||||
| Time deposits of $250,000 and over | 243,877 | 232,725 | 4.8 | % | 189,925 | 28.4 | % | |||||||||||||
| Total deposits | 1,178,211 | 1,146,262 | 2.8 | % | 1,002,610 | 17.5 | % | |||||||||||||
| Borrowings | 40,000 | - | NA | - | NA | |||||||||||||||
| Accrued interest payable | 1,918 | 1,701 | 12.8 | % | 1,655 | 15.9 | % | |||||||||||||
| Other liabilities | 7,048 | 7,162 | -1.6 | % | 6,508 | 8.3 | % | |||||||||||||
| Total liabilities | $ | 1,227,177 | $ | 1,155,125 | 6.2 | % | $ | 1,010,773 | 21.4 | % | ||||||||||
| Capital | ||||||||||||||||||||
| Common stock | 125,354 | 125,270 | 0.1 | % | 102,510 | 22.3 | % | |||||||||||||
| Additional paid in capital | 2,611 | 2,502 | 4.4 | % | 2,272 | 14.9 | % | |||||||||||||
| Retained earnings | 8,454 | 3,996 | 111.6 | % | - | NA | ||||||||||||||
| Other comprehensive (loss) income | (466 | ) | (461 | ) | 1.1 | % | 570 | -181.8 | % | |||||||||||
| Total capital | 135,953 | 131,307 | 3.5 | % | 105,352 | 29.0 | % | |||||||||||||
| Total liabilities & capital | $ | 1,363,130 | $ | 1,286,432 | 6.0 | % | $ | 1,116,125 | 22.1 | % | ||||||||||
| Pacific City Financial Corporation | ||||||||||||||||||
| Consolidated Income Statements (Unaudited) | ||||||||||||||||||
| (Dollars in thousands, except share and per share data) | ||||||||||||||||||
| Three Months Ended | ||||||||||||||||||
|
Jun. 30,
2017 |
Mar. 31,
2017 |
Percentage
Change |
Jun. 30,
2016 |
Percentage
Change |
||||||||||||||
| Interest income | ||||||||||||||||||
| Interest and fees on loans | $ | 14,807 | $ | 13,877 | 6.7 | % | $ | 11,971 | 23.7 | % | ||||||||
| Interest on investments | 588 | 508 | 15.7 | % | 440 | 33.6 | % | |||||||||||
| Interest on others | 294 | 232 | 26.7 | % | 136 | 116.2 | % | |||||||||||
| Total interest income | 15,689 | 14,617 | 7.3 | % | 12,547 | 25.0 | % | |||||||||||
| Interest expense | ||||||||||||||||||
| Interest on deposits | 2,302 | 2,147 | 7.2 | % | 1,630 | 41.2 | % | |||||||||||
| Interest on borrowings | 3 | - | NA | 3 | 0.0 | % | ||||||||||||
| Total interest expenses | 2,305 | 2,147 | 7.4 | % | 1,633 | 41.2 | % | |||||||||||
| Net interest income | 13,384 | 12,470 | 7.3 | % | 10,914 | 22.6 | % | |||||||||||
| (Negative) Provision for loan losses (PLL) | (274 | ) | (198 | ) | 38.4 | % | 369 | -174.3 | % | |||||||||
| Net interest income after PLL | 13,658 | 12,668 | 7.8 | % | 10,545 | 29.5 | % | |||||||||||
| Non-interest income | ||||||||||||||||||
| Gain on sale of SBA loans | 2,320 | 2,315 | 0.2 | % | 1,481 | 56.7 | % | |||||||||||
| Gain on sale of residential mortgage loans | 50 | 29 | 72.4 | % | 346 | -85.5 | % | |||||||||||
| Service charges on deposits | 337 | 350 | -3.7 | % | 354 | -4.8 | % | |||||||||||
| Loan servicing fees | 601 | 566 | 6.2 | % | 543 | 10.7 | % | |||||||||||
| Net (loss) gain on sale of OREO | (5 | ) | - | NA | - | NA | ||||||||||||
| Other | 274 | 228 | 20.2 | % | 264 | 3.8 | % | |||||||||||
| Total non-interest income | 3,577 | 3,488 | 2.6 | % | 2,988 | 19.7 | % | |||||||||||
| Non-interest expense | ||||||||||||||||||
| Employee salaries & benefits | 5,574 | 5,521 | 1.0 | % | 4,936 | 12.9 | % | |||||||||||
| Occupancies and fixed assets | 1,090 | 1,096 | -0.5 | % | 1,061 | 2.7 | % | |||||||||||
| Legal & professional | 655 | 584 | 12.2 | % | 641 | 2.2 | % | |||||||||||
| FDIC assessment | 104 | 98 | 6.1 | % | 134 | -22.4 | % | |||||||||||
| Marketing expenses | 370 | 267 | 38.6 | % | 282 | 31.2 | % | |||||||||||
| Data and item processing expenses | 260 | 249 | 4.4 | % | 236 | 10.2 | % | |||||||||||
| Loan related expenses | 99 | 124 | -20.2 | % | 80 | 23.8 | % | |||||||||||
| Others | 639 | 581 | 10.0 | % | 559 | 14.3 | % | |||||||||||
| Total non-interest expenses | 8,791 | 8,520 | 3.2 | % | 7,929 | 10.9 | % | |||||||||||
| Net income before taxes | 8,444 | 7,636 | 10.6 | % | 5,604 | 50.7 | % | |||||||||||
| Income tax provision | 3,584 | 3,239 | 10.7 | % | 2,381 | 50.5 | % | |||||||||||
| Net income | $ | 4,860 | $ | 4,397 | 10.5 | % | $ | 3,223 | 50.8 | % | ||||||||
| Earnings per common shares | ||||||||||||||||||
| Basic | $ | 0.36 | $ | 0.33 | $ | 0.27 | ||||||||||||
| Diluted | $ | 0.36 | $ | 0.33 | $ | 0.27 | ||||||||||||
| Average shares outstanding | ||||||||||||||||||
| Basic | 13,408,282 | 13,395,363 | 11,961,635 | |||||||||||||||
| Diluted | 13,542,538 | 13,503,502 | 12,033,856 | |||||||||||||||
| Pacific City Financial Corporation | |||||||||||||||
| Consolidated Income Statements (Unaudited) | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||
| Six Months Ended | |||||||||||||||
| June 30, 2017 | June 30, 2016 | Amount Change | % Change | ||||||||||||
| Interest income | |||||||||||||||
| Interest and fees on loans | $ | 28,684 | $ | 23,610 | 5,074 | 21.5 | % | ||||||||
| Interest on investments | 1,096 | 946 | 150 | 15.9 | % | ||||||||||
| Interest on others | 526 | 256 | 270 | 105.5 | % | ||||||||||
| Total interest income | 30,306 | 24,812 | 5,494 | 22.1 | % | ||||||||||
| Interest expenses | |||||||||||||||
| Interest on deposits | 4,448 | 3,195 | 1,253 | 39.2 | % | ||||||||||
| Interest on borrowings | 4 | 5 | (1 | ) | -20.0 | % | |||||||||
| Total interest expenses | 4,452 | 3,200 | 1,252 | 39.1 | % | ||||||||||
| Net interest income | 25,854 | 21,612 | 4,242 | 19.6 | % | ||||||||||
| (Negative) provision for loan losses (PLL) | (472 | ) | 860 | (1,332 | ) | -154.9 | % | ||||||||
| Net interest income after PLL | 26,326 | 20,752 | 5,574 | 26.9 | % | ||||||||||
| Non-interest income | |||||||||||||||
| Gain on sale of SBA loans | 4,635 | 3,260 | 1,375 | 42.2 | % | ||||||||||
| Gain on sale of HM loans | 79 | 391 | (312 | ) | -79.8 | % | |||||||||
| Service charges on deposits | 687 | 720 | (33 | ) | -4.6 | % | |||||||||
| Loans servicing fees | 1,167 | 1,087 | 80 | 7.4 | % | ||||||||||
| Net (loss) gain on OREO | (5 | ) | - | (5 | ) | NA | |||||||||
| Other | 503 | 499 | 4 | 0.8 | % | ||||||||||
| Total non-interest income | 7,066 | 5,957 | 1,109 | 18.6 | % | ||||||||||
| Non-interest expenses | |||||||||||||||
| Employee salaries & benefits | 11,095 | 9,700 | 1,395 | 14.4 | % | ||||||||||
| Occupancies and fixed assets | 2,185 | 2,109 | 76 | 3.6 | % | ||||||||||
| Legal & professional | 1,238 | 1,461 | (223 | ) | -15.3 | % | |||||||||
| FDIC assessment | 201 | 273 | (72 | ) | -26.4 | % | |||||||||
| Marketing expenses | 637 | 628 | 9 | 1.4 | % | ||||||||||
| Data and item processing expenses | 510 | 465 | 45 | 9.7 | % | ||||||||||
| Loan related expenses | 222 | 126 | 96 | 76.2 | % | ||||||||||
| Others | 1,223 | 1,149 | 74 | 6.4 | % | ||||||||||
| Total non-interest expenses | 17,311 | 15,911 | 1,400 | 8.8 | % | ||||||||||
| Net income before tax | 16,081 | 10,798 | 5,283 | 48.9 | % | ||||||||||
| Income tax provision | 6,823 | 4,588 | 2,235 | 48.7 | % | ||||||||||
| Net income after tax | $ | 9,258 | $ | 6,210 | 3,048 | 49.1 | % | ||||||||
| Earnings (loss) per common shares | |||||||||||||||
| Basic | $ | 0.69 | $ | 0.52 | |||||||||||
| Diluted | $ | 0.68 | $ | 0.52 | |||||||||||
| Average shares outstanding | |||||||||||||||
| Basic | 13,401,859 | 11,920,717 | |||||||||||||
| Diluted | 13,523,128 | 12,001,106 | |||||||||||||
| Return on average assets | 1.46 | % | 1.17 | % | |||||||||||
| Return on average stockholders' equity | 14.14 | % | 12.18 | % | |||||||||||
| Net interest margin | 4.17 | % | 4.18 | % | |||||||||||
| Efficiency ratio | 52.58 | % | 57.71 | % | |||||||||||
| Pacific City Financial Corporation | ||||||||||||||||||||||||||||||||
| Average Balance, Average Yield, and Average Rate | ||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||
| June 30, 2017 | March 31, 2017 | June 30, 2016 | ||||||||||||||||||||||||||||||
|
Average
Balance |
Interest
Income/ Expense |
Average
Yield/ Rate |
Average
Balance |
Interest
Income/ Expense |
Average
Yield/ Rate |
Average
Balance |
Interest
Income/ Expense |
Average
Yield/ Rate |
||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Interest-earning assets: |
|
|||||||||||||||||||||||||||||||
| Gross loans, net of deferred loan fees | $ | 1,077,835 | $ | 14,807 | 5.51 | % | $ | 1,055,843 | $ | 13,877 | 5.33 | % | $ | 925,815 | $ | 11,971 | 5.20 | % |
|
|||||||||||||
| US government agencies | 24,753 | 145 | 2.34 | % | 22,701 | 130 | 2.28 | % | 21,535 | 120 | 2.23 | % |
|
|||||||||||||||||||
| Mortgage backed securities | 51,808 | 246 | 1.90 | % | 49,129 | 220 | 1.79 | % | 45,465 | 200 | 1.76 | % | ||||||||||||||||||||
| Collateralized mortgage obligation | 29,977 | 149 | 1.99 | % | 23,657 | 110 | 1.87 | % | 22,045 | 84 | 1.53 | % | ||||||||||||||||||||
| Muni bonds | 8,777 | 48 | 2.19 | % | 8,794 | 48 | 2.19 | % | 7,482 | 35 | 1.89 | % | ||||||||||||||||||||
| Interest bearing deposit & others | 74,315 | 194 | 1.04 | % | 53,007 | 106 | 0.81 | % | 21,515 | 26 | 0.49 | % | ||||||||||||||||||||
| Total interest-earning assets | $ | 1,267,465 | $ | 15,589 | 4.93 | % | $ | 1,213,131 | $ | 14,491 | 4.84 | % | $ | 1,043,856 | $ | 12,437 | 4.79 | % | ||||||||||||||
| Noninterest-earning assets: | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 16,085 | $ | 16,945 | $ | 15,279 | ||||||||||||||||||||||||||
| Allowances for loan losses | (11,266 | ) | (11,479 | ) | (9,376 | ) | ||||||||||||||||||||||||||
| Other assets | 33,200 | 33,141 | 31,099 | |||||||||||||||||||||||||||||
| $ | 38,019 | $ | 38,607 | $ | 37,002 | |||||||||||||||||||||||||||
| Total assets | $ | 1,305,484 | $ | 1,251,738 | $ | 1,080,858 | ||||||||||||||||||||||||||
| Liabilities and Stockholders' Equity | ||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||||||||
| Money market & NOW accounts | $ | 323,657 | $ | 812 | 1.01 | % | $ | 322,261 | $ | 776 | 0.98 | % | $ | 225,210 | $ | 489 | 0.87 | % | ||||||||||||||
| Savings | 8,810 | 6 | 0.27 | % | 8,713 | 6 | 0.28 | % | 10,652 | 7 | 0.26 | % | ||||||||||||||||||||
| Time deposits | 523,502 | 1,483 | 1.14 | % | 508,411 | 1,365 | 1.09 | % | 459,947 | 1,133 | 0.99 | % | ||||||||||||||||||||
| Total interest-bearing deposits | $ | 855,969 | $ | 2,301 | 1.08 | % | $ | 839,385 | $ | 2,147 | 1.04 | % | $ | 695,809 | $ | 1,630 | 0.94 | % | ||||||||||||||
| Borrowings: | ||||||||||||||||||||||||||||||||
| Other borrowings | 879 | 4 | 1.71 | % | 1 | - | NA | 2,764 | 3 | 0.46 | % | |||||||||||||||||||||
| $ | 879 | $ | 4 | 1.71 | % | $ | 1 | $ | - | NA | $ | 2,764 | $ | 3 | 0.46 | % | ||||||||||||||||
| Total interest-bearing liabilities | $ | 856,848 | $ | 2,305 | 1.08 | % | $ | 839,386 | $ | 2,147 | 1.04 | % | $ | 698,573 | 1,633 | 0.94 | % | |||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||||||||||
| Demand deposits | $ | 305,267 | $ | 275,151 | $ | 269,190 | ||||||||||||||||||||||||||
| Other liabilities | 8,837 | 7,689 | 8,417 | |||||||||||||||||||||||||||||
| $ | 314,104 | $ | 282,840 | $ | 277,607 | |||||||||||||||||||||||||||
| Total liabilities | $ | 1,170,952 | $ | 1,122,226 | $ | 976,180 | ||||||||||||||||||||||||||
| Stockholders' equity | $ | 134,532 | $ | 129,512 | $ | 104,678 | ||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 1,305,484 | $ | 1,251,738 | $ | 1,080,858 | ||||||||||||||||||||||||||
| Net interest income | $ | 13,284 | $ | 12,344 | $ | 10,804 | ||||||||||||||||||||||||||
| Cost of funds | 0.80 | % | 0.78 | % | 0.68 | % | ||||||||||||||||||||||||||
| Net interest spread | 3.85 | % | 3.81 | % | 3.85 | % | ||||||||||||||||||||||||||
| Net interest margin | 4.20 | % | 4.13 | % | 4.16 | % | ||||||||||||||||||||||||||
| Pacific City Financial Corporation | ||||||||||||||||||||||||
| Average Balance, Average Yield, and Average Rate | ||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| Six Month Ended | ||||||||||||||||||||||||
| June 30, 2017 | June 30, 2016 | |||||||||||||||||||||||
|
Average
Balance |
Interest
Income/ Expense |
Average
Yield Rate |
Average
Balance |
Interest
Income/ Expense |
Average
Yield Rate |
|||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Interest-earning assets: |
|
|||||||||||||||||||||||
| Gross loans, net of deferred loan fees | $ | 1,066,900 | $ | 28,684 | 5.42 | % | $ | 912,784 | $ | 23,610 | 5.20 | % |
|
|||||||||||
| US government agencies | 23,733 | 274 | 1.54 | % | 22,557 | 252 | 1.49 | % |
|
|||||||||||||||
| Mortgage backed securities | 50,476 | 466 | 1.23 | % | 46,439 | 446 | 1.28 | % | ||||||||||||||||
|
Collateralized mortgage obligation |
26,834 | 259 | 1.29 | % | 22,483 | 177 | 1.05 | % | ||||||||||||||||
| Muni bonds | 8,785 | 96 | 1.46 | % | 7,494 | 71 | 1.26 | % | ||||||||||||||||
| Interest bearing deposit & others | 63,720 | 300 | 0.95 | % | 18,814 | 46 | 0.32 | % | ||||||||||||||||
| Total interest earning assets | $ | 1,240,448 | $ | 30,079 | 4.89 | % | $ | 1,030,571 | $ | 24,602 | 4.80 | % | ||||||||||||
| Noninterest-earning assets: | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | 16,513 | $ | 15,095 | ||||||||||||||||||||
| Allowances for loan losses | (11,372 | ) | (9,502 | ) | ||||||||||||||||||||
| Other assets | 33,171 | 29,179 | ||||||||||||||||||||||
| Total noninterest-earning assets | $ | 38,312 | $ | 34,772 | ||||||||||||||||||||
| Total assets | $ | 1,278,760 | $ | 1,065,343 | ||||||||||||||||||||
| Liabilities and Stockholders' Equity | ||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||
| Money market & NOW accounts | $ | 322,963 | $ | 1,589 | 0.99 | % | $ | 226,909 | $ | 980 | 0.87 | % | ||||||||||||
| Savings | 8,762 | 12 | 0.28 | % | 9,456 | 13 | 0.27 | % | ||||||||||||||||
| Time deposits | 515,998 | 2,847 | 1.11 | % | 322,665 | 2,202 | 1.37 | % | ||||||||||||||||
| Total interest-bearing deposits | $ | 847,723 | $ | 4,448 | 1.06 | % | $ | 559,030 | $ | 3,195 | 1.15 | % | ||||||||||||
| Borrowings: | ||||||||||||||||||||||||
| Other borrowings | 442 | 4 | 1.82 | % | 2,402 | 5 | 0.46 | % | ||||||||||||||||
| Total borrowings: | $ | 442 | $ | 4 | 1.82 | % | $ | 2,402 | $ | 5 | 0.46 | % | ||||||||||||
| Total interest-bearing liabilities | $ | 848,165 | $ | 4,452 | 1.06 | % | $ | 561,432 | $ | 3,200 | 1.15 | % | ||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | $ | 290,292 | $ | 267,348 | ||||||||||||||||||||
| Other liabilities | 8,267 | 134,008 | ||||||||||||||||||||||
| Total noninterest-bearing liabilities | $ | 298,559 | $ | 401,356 | ||||||||||||||||||||
| Total liabilities | $ | 1,146,724 | $ | 962,788 | ||||||||||||||||||||
| Stockholders' equity | $ | 132,036 | $ | 102,554 | ||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 1,278,760 | $ | 1,065,343 | ||||||||||||||||||||
| Net interest income | $ | 25,627 | $ | 21,402 | ||||||||||||||||||||
| Cost of deposits | 0.79 | % | 0.78 | % | ||||||||||||||||||||
| Net interest spread | 3.83 | % | 3.65 | % | ||||||||||||||||||||
| Net interest margin | 4.17 | % | 4.18 | % | ||||||||||||||||||||
