First Choice Bancorp (NASDAQ: FCBP) ("us," "we," "our," or the
"Company"), the holding company of First Choice Bank (the "Bank"),
today reported net income of $9.8 million for the first quarter of
2021, or $0.82 per diluted share, compared to net income of $10.8
million, or $0.92 per diluted share, for the fourth quarter of 2020
and net income of $4.5 million, or $0.39 per diluted share, for the
first quarter of 2020. Pre-tax pre-provision income was $14.0
million for the first quarter of 2021, a decrease of $1.4 million,
compared to the pre-tax pre-provision income of $15.4 million for
the fourth quarter of 2020 and an increase of $4.9 million,
compared to the pre-tax pre-provision income of $9.1 million for
the first quarter of 2020.
“First Choice’s first quarter of 2021
demonstrated the resilience of our franchise, the continued
dedication of our employees, and the tremendous success we have
been able to achieve for our clients and shareholders” said Peter
Hui, Chairman of the Board of the Company. “With the rapid economic
recovery, we are poised for continued growth while appropriately
managing risks. I am proud of our First Choice Family and the
commitment they have to our community and local businesses. It is
their daily effort that continues to make First Choice
successful.”
“We began 2021 with a sense of optimism about
our business and the economy and we were not disappointed,” said
Robert M. Franko, President, CEO and CFO of the Company. “Our first
quarter results again demonstrated the strength of our banking
franchise as we grew assets and deposits while maintaining healthy
margins and strong credit quality. We continued to support the
individuals and businesses we serve by originating $194 million of
Round 3 PPP loans. The rebound of the local economy will provide
the Company with the opportunity to reinforce our position as one
of the premier Southern California community banks.”
STATEMENT OF INCOME
Net Interest Income
Net interest income for the first quarter of
2021 totaled $23.8 million, an increase of $298 thousand from the
fourth quarter of 2020 due to lower interest expense of $379
thousand, partially offset by lower interest income of $81
thousand. The decrease in interest expense for the first quarter of
2021 was due primarily to lower interest expense on brokered time
deposits and lower borrowing interest expense. Interest expense on
deposits decreased $311 thousand, coupled with a decrease of $68
thousand on total borrowings. Interest expense on the PPP Liquidity
Facility ("PPPLF") was $171 thousand for the first quarter of 2021,
compared to $216 thousand in the fourth quarter of 2020 due to
lower average borrowings.
Net Interest Margin
Net interest margin for the first quarter of 2021 decreased 11
basis points to 4.20% from 4.31% for the fourth quarter of
2020.
The decrease in the net interest margin was due
primarily to an 18 basis point decrease in loan yields (including
fees and discounts), partially offset by a 9 basis point decrease
in total funding costs. The yield on loans decreased to 4.97% for
the first quarter of 2021, compared to 5.15% for the fourth quarter
of 2020. The weighted average loan yield for PPP loans was 3.76%
including the accelerated accretion of deferred fee income from PPP
loan forgiveness, or 2.32% without the accelerated accretion
income. The yield on loans, excluding PPP loans, was stable at
5.27% and 5.28% for the first quarter of 2021 and the fourth
quarter of 2020, respectively.
The cost of funds decreased to 0.18% for the
first quarter of 2021, compared to 0.27% for the fourth quarter of
2020, due primarily to an increase in average noninterest-bearing
deposits, coupled with the lower brokered time deposit costs. The
average cost of brokered time deposits decreased 114 basis points
to 0.57% for the first quarter of 2021, compared to 1.71% for the
fourth quarter of 2020.
The total cost of deposits decreased 9 basis
points to 0.13% for the first quarter of 2021, compared to 0.22%
for the fourth quarter of 2020.
Provision for Loan Losses
No provision for loan losses was recognized for
the first quarter of 2021, compared to $100 thousand for the fourth
quarter of 2020. The decrease in the first quarter provision for
loan losses was driven primarily by $104 thousand in net
recoveries, a decrease in specific reserves of $368 thousand from a
risk rating upgrade of a nonperforming loan relationship, and lower
historical loss rates in the first quarter of 2021, partially
offset by the increased reserves required for organic loan growth.
While the economy gradually reopened in the first quarter of 2021
with the COVID-19 vaccine rollout, the timing of an economic
recovery continues to remain uncertain. Accordingly, the
assumptions underlying the COVID-19 related qualitative factors we
used in determining the adequacy of the provision for loan losses
continued to include (a) uncertain and volatile macroeconomic
conditions caused by the pandemic; (b) a stabilized unemployment
rate; and (c) the additional government stimulus package signed
into law during the first quarter of 2021. No provision for loan
losses was recognized on PPP loans as the SBA guarantees 100% of
loan principal under the program.
Noninterest Income
Noninterest income for the first quarter of 2021
was $2.3 million, a decrease of $1.9 million from $4.2 million for
the fourth quarter of 2020 due primarily to lower gains on loan
sales of $2.6 million, partially offset by higher net servicing
fees of $199 thousand and higher other income of $468 thousand. SBA
loans sold during the first quarter of 2021 totaled $7.4 million
resulting in a gain on sale of $706 thousand, compared to $36.7
million of SBA loans sold resulting in a gain on sale of $2.6
million in the fourth quarter of 2020. Gain on loan sales for the
fourth quarter of 2020 included the sale of 95% participation
interest in Main Street loans resulting in gains of $660 thousand.
Other income included $476 thousand gain from sale of the Rowland
Heights branch during the first quarter of 2021. There was no
similar income in the fourth quarter of 2020.
Noninterest Expense
Noninterest expense decreased $224 thousand to
$12.1 million for the first quarter of 2021 from $12.3 million for
the fourth quarter of 2020. This decrease was due primarily to
lower salaries and employee benefit expenses, and lower occupancy
and equipment, partially offset by higher other expenses.
The $306 thousand decrease in salaries and
employee benefits was primarily due to lower commission and
incentive accruals and higher deferred origination costs, partially
offset by higher payroll taxes and employee benefits resulting from
a seasonally higher first quarter. The $85 thousand decrease in
occupancy and equipment was due primarily to the reduction of rent
expense from the branch sale and other office space consolidations
during the first quarter of 2021.
The increase in other expenses related primarily
to a $200 thousand increase in the provision for unfunded loan
commitments
resulting from a volume increase in the first
quarter of 2021. There was no provision for unfunded loan
commitments recognized in the fourth quarter of 2020.
The efficiency ratio remained favorable and
increased to 46.4% in the first quarter of 2021, compared to 44.4%
in the fourth quarter of 2020. The higher efficiency ratio in the
first quarter of 2021 was driven primarily by lower revenue.
Income Taxes
Income tax expense was $4.2 million for the
first quarter of 2021 compared to $4.5 million for the fourth
quarter of 2020. The effective tax rate was 30.2% for the first
quarter of 2021 and 29.5% for the fourth quarter of 2020.
STATEMENT OF FINANCIAL CONDITION
Loan Portfolio
Total loans held for investment increased $147.8
million in the first quarter of 2021, to $2.03 billion at March 31,
2021, due to the net loan growth from PPP loans of $122.6 million,
coupled with $25.3 million of net organic loan growth. Loans held
for sale increased $2.7 million to $12.7 million as the Company
continued to originate new SBA 7a loans in the first quarter of
2021.
New loan commitments from organic growth,
excluding PPP loans, totaled $166.2 million for the first quarter
of 2021, compared to $202.9 million for the fourth quarter of 2020
and included $103.9 million in construction and commercial real
estate loans, $41.0 million in commercial and industrial loans,
$21.3 million in SBA loans.
Total unfunded loan commitments increased $54.5
million to $487.8 million at March 31, 2021 from $433.3 million at
December 31, 2020 due partially to new commitments during the
first quarter of 2021.PPP Loans
PPP loans, net of unearned fees of $10.5
million, totaled $442.7 million at March 31, 2021. During the first
quarter of 2021, the Company originated more than 700 PPP Round 3
loans with outstanding principal of $194.3 million before net
deferred fees of $6.5 million. Net deferred fees on PPP Round 3 are
being accreted to income based on the five-year contractual loan
maturity. During the first quarter of 2021, approximately $67.9
million of PPP loans originated in 2020 were forgiven by the SBA or
repaid by the borrowers. Net PPP deferred fees of $1.4 million were
accelerated to income at the time of SBA forgiveness or borrower
repayment. PPP loans forgiven-to-date totaled $140.9 million at
March 31, 2021.
Deposits
Total deposits increased $261.4 million from the
prior quarter to $1.90 billion at March 31, 2021 due to an increase
in both noninterest-bearing and interest-bearing nonmaturity
deposits, partially offset by a decrease in time deposit
accounts.
At March 31, 2021, noninterest-bearing deposits
totaled $998.5 million, an increase of $177.8 million in the first
quarter of 2021 due primarily to the increase in core customer
deposits, coupled with the increase in customers' accounts funded
by the PPP funds. Interest-bearing nonmaturity deposits increased
$90.4 million due primarily to an increase in low cost brokered
deposits. Noninterest-bearing deposits represented 52.7% of total
deposits at March 31, 2021, compared to 50.2% of total deposits at
December 31, 2020.
Time deposits decreased $6.8 million due to a
decrease in customer time deposits which matured in the first
quarter of 2021, offset by an increase in brokered time deposits.
At March 31, 2021, brokered time deposits totaled $109.8 million,
compared to $101.1 million at December 31, 2020.
Borrowings
At March 31, 2021, FHLB borrowings decreased
$50.0 million to $95.0 million, compared to $145.0 million at
December 31, 2020. The decrease in FHLB borrowings was due to
the growth in noninterest-bearing deposits during the first quarter
of 2021. The Company's borrowings under the PPPLF totaled $210.0
million, an increase of $5.3 million in the first quarter of 2021,
compared to $204.7 million at December 31, 2020. The increase
in PPPLF was due to new borrowings of $50.7 million related to the
Round 3 PPP loans, partially offset by the repayment of $45.4
million related to the PPP loan forgiveness during the first
quarter of 2021. At March 31, 2021, there were no borrowings under
the senior secured notes, compared to $2.0 million at
December 31, 2020.
Credit Quality
Nonperforming loans decreased to $4.2 million at
March 31, 2021, compared to $6.4 million at December 31, 2020,
and represented 0.21% and 0.34%, respectively, of total loans held
for investment. The decrease in nonperforming loans was due to
seven loans totaling $2.2 million either upgraded and returned to
accrual status or paid in full with no loss during the first
quarter of 2021. There were no loans over 90 days past due that
were still accruing interest at March 31, 2021. Net recoveries for
the first quarter of 2021 were $104 thousand, or 0.02% of average
loans on an annualized basis, compared to net recoveries of $333
thousand or 0.07% of average loans on an annualized basis for the
fourth quarter of 2020. Nonperforming assets totaled $4.2 million
at March 31, 2021, compared to $6.4 million at December 31,
2020, and represented 0.17% and 0.28% of total assets,
respectively.
Loan delinquencies (30-89 days past due) totaled
$1 thousand at March 31, 2021, compared to $54 thousand at December
31, 2020.
The allowance for loan losses increased 0.5% to
$19.3 million and represented 0.95% of total loans held for
investment and 459.8% of nonperforming loans at March 31, 2021,
compared to 1.02% and 297.3% at December 31, 2020,
respectively. The allowance for loan losses as a percentage of
total loans held for investment excluding PPP loans was 1.22% at
March 31, 2021. At March 31, 2021, the net carrying value of
acquired loans totaled $152.9 million and included a remaining net
discount of $3.4 million. The discount is available to absorb
losses on the acquired loans and represented 2.2% of the net
carrying value of acquired loans and 0.17% of total gross loans
held for investment.
CAPITAL POSITION
Capital Ratios
The Bank opted into the Community Bank Leverage
Ratio ("CBLR") framework, beginning with the first quarter of 2020.
The CBLR replaces the risk-based and leverage capital requirements
in the generally applicable capital rules. The minimum CBLR was
originally 9%, however, on April 23, 2020, the federal banking
regulators, implementing the applicable provisions of the CARES
Act, issued interim rules which modified the CBLR framework so
that: (i) beginning in the second quarter 2020 and until the end of
the year, a banking organization that has a leverage ratio of 8% or
greater and meets certain other criteria may elect to use the CBLR
framework; and (ii) community banking organizations will have until
January 1, 2022, before the CBLR requirement is re-established at
greater than 9%. Under the interim rules, the minimum CBLR is 8.5%
for calendar year 2021, and 9% thereafter. The interim rules also
maintain a two-quarter grace period for a qualifying community
banking organization whose leverage ratio falls no more than 1%
below the applicable community bank leverage ratio. In addition,
assets originated under the PPP and covered loans pledged under the
PPPLF are deducted from the average total consolidated assets for
purposes of calculating the CBLR. However, such assets are included
in total consolidated assets for purposes of determining the
eligibility to opt into the CBLR framework.
At March 31, 2021, the Bank's preliminary CBLR
ratio was 9.76% which exceeded all regulatory capital requirements
under the CBLR framework and, accordingly, the Bank was considered
to be ‘‘well-capitalized’’.
About First Choice Bancorp
First Choice Bancorp, headquartered in Cerritos,
California, is the sole shareholder of and the registered bank
holding company for, First Choice Bank. As of March 31, 2021, First
Choice Bancorp had total consolidated assets of $2.50 billion.
First Choice Bank, also headquartered in Cerritos, California, is a
community-based financial institution that serves primarily
commercial and consumer clients in diverse communities and
specializes in loans to small- to medium-sized businesses and
private banking clients, commercial and industrial loans, and
commercial real estate loans. First Choice Bank is a Preferred
Small Business Administration (SBA) Lender. First Choice Bank
conducts business through eight full-service branches and two loan
production offices located in Los Angeles, Orange and San Diego
Counties. Founded in 2005, First Choice Bank has quickly become a
leading provider of financial services that enable our customers to
grow, maintain strength, and achieve their business objectives. We
strive to surpass our clients’ expectations through our efficiency,
personalized services and financial solutions and professionalism
and are committed to being “First in Speed, Service, and
Solutions.” First Choice Bank is a strong believer in social
justice and equality and is proud of its cultural- and
gender-diverse workforce. As of March 31, 2021, more than 72% of
the Company's total workforce identified as ethnic minorities and
more than 65% of its workforce and more than 50% of its senior
management identified as female. First Choice Bancorp stock is
traded on the Nasdaq Capital Market under the ticker symbol
“FCBP.”
First Choice Bank’s website is www.FirstChoiceBankCA.com.
Non-GAAP Financial Measures
This press release contains certain non-GAAP
financial measures in addition to results presented in accordance
with GAAP. The Company uses certain non-GAAP financial measures to
provide meaningful supplemental information regarding the Company's
results of operations and financial condition and to enhance
investors' overall understanding of such results of operations and
financial condition, permit investors to effectively analyze
financial trends of our business activities, and enhance
comparability with peers across the financial services sector.
These non-GAAP financial measures are not a substitute for GAAP
measures and should be read in conjunction with the Company’s GAAP
financial information. A reconciliation of GAAP financial measures
to non-GAAP financial measures is included in the accompanying
financial tables.
Forward-Looking Statements
In addition to historical information, certain
matters set forth herein constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995, including forward-looking statements relating to
management’s beliefs, projections and assumptions concerning future
results and events. Forward-looking statements include descriptions
of management’s plans or objectives for future operations, products
or services, and forecasts of the Company’s revenues, earnings or
other measures of economic performance. As well, forward-looking
statements may relate to future outlook and anticipated events,
such as the Company's plans and protocols with regard to managing
potential impacts related to the COVID-19 virus, the Company's
strategy to help keep its workforce and local communities safe, the
Company's business continuity protocols and the potential impact on
operations related to COVID-19, and the Company's ability to
successfully advance its development and expansion projects and
achieve its growth objectives. These forward-looking statements
involve risks and uncertainties, based on the beliefs and
assumptions of management and on the information available to
management at the time that this presentation was prepared and can
be identified by the fact that they do not relate strictly to
historical or current facts. They often include the words or
phrases such as “aim,” “can,” "may," "could," "predict," "should,"
"will," "would," "believe," "anticipate," "estimate," "expect,"
“hope,” "intend," "plan," "potential," ‘project,” "will likely
result," "continue," "seek," “shall,” “possible,” "projection,"
“optimistic,” and "outlook," and variations of these words and
similar expressions or the negative version of those words or
phrases.
Forward-looking statements involve substantial
risks and uncertainties, many of which are difficult to predict and
are generally beyond our control. Many factors could cause actual
results to differ materially from those contemplated by these
forward-looking statements. The Company does not undertake, and
specifically disclaims any obligation, to update any
forward-looking statements to reflect occurrences or unanticipated
events or circumstances after the date of such statements except as
required by law. Any statements about future operating results,
such as those concerning accretion and dilution to the Company's
earnings or shareholders, are for illustrative purposes only, are
not forecasts, and actual results may differ. Risks and
uncertainties that could cause our financial performance to differ
materially from our goals, plans, expectations and projections
expressed in forward-looking statements include those set forth in
our filings with the SEC, including under Item 1A of our Annual
Report on Form 10-K for the fiscal year ended December 31, 2020 as
may be supplemented and/or amended by our Quarterly Reports on Form
10-Q as filed subsequent thereto.
ContactsFirst Choice BancorpRobert M. Franko,
562.345.9241President, Chief Executive Officer and Chief Financial
Officer
First Choice BankMag Wangsuwana, 562.263.8340Senior Vice
President and Chief Financial Officer
First Choice Bancorp and Subsidiary
Financial Highlights and Selected Ratios
(unaudited):
|
|
At or for the Three Months Ended |
|
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
|
|
(dollars in thousands, except per share amounts) |
Total interest and dividend
income |
|
$ |
24,792 |
|
|
$ |
24,873 |
|
|
$ |
21,744 |
|
Total interest expense |
|
961 |
|
|
1,340 |
|
|
2,571 |
|
Net interest income |
|
23,831 |
|
|
23,533 |
|
|
19,173 |
|
Total noninterest income |
|
2,254 |
|
|
4,194 |
|
|
1,415 |
|
Total net interest income and
noninterest income |
|
26,085 |
|
|
27,727 |
|
|
20,588 |
|
Total noninterest expense |
|
12,097 |
|
|
12,321 |
|
|
11,519 |
|
Pre-tax pre-provision income
(1) |
|
13,988 |
|
|
15,406 |
|
|
9,069 |
|
Provision for loan losses |
|
— |
|
|
100 |
|
|
2,700 |
|
Income before taxes |
|
13,988 |
|
|
15,306 |
|
|
6,369 |
|
Income taxes |
|
4,230 |
|
|
4,512 |
|
|
1,823 |
|
NET
INCOME |
|
$ |
9,758 |
|
|
$ |
10,794 |
|
|
$ |
4,546 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
2,500,744 |
|
|
$ |
2,283,115 |
|
|
$ |
1,775,662 |
|
Total loans held for
investment |
|
2,028,599 |
|
|
1,880,777 |
|
|
1,438,055 |
|
Total loans held for
investment excluding PPP loans |
|
1,585,955 |
|
|
1,560,687 |
|
|
1,438,055 |
|
Noninterest-bearing
deposits |
|
998,515 |
|
|
820,711 |
|
|
627,793 |
|
Total deposits |
|
1,895,550 |
|
|
1,634,158 |
|
|
1,351,040 |
|
Dividends declared per common
share |
|
$ |
0.25 |
|
|
$ |
0.25 |
|
|
$ |
0.25 |
|
Net income per
share-diluted |
|
$ |
0.82 |
|
|
$ |
0.92 |
|
|
$ |
0.39 |
|
Return on average assets |
|
1.64 |
% |
|
1.88 |
% |
|
1.06 |
% |
Return on average equity |
|
13.86 |
% |
|
15.44 |
% |
|
6.90 |
% |
Return on average tangible
common equity (1) |
|
19.09 |
% |
|
21.52 |
% |
|
9.84 |
% |
Net interest margin |
|
4.20 |
% |
|
4.31 |
% |
|
4.78 |
% |
Average loan yield |
|
4.97 |
% |
|
5.15 |
% |
|
5.95 |
% |
Cost of deposits |
|
0.13 |
% |
|
0.22 |
% |
|
0.63 |
% |
Cost of funds |
|
0.18 |
% |
|
0.27 |
% |
|
0.72 |
% |
Efficiency ratio (1) |
|
46.4 |
% |
|
44.4 |
% |
|
56.0 |
% |
Noninterest-bearing deposits
to total deposits |
|
52.7 |
% |
|
50.2 |
% |
|
46.5 |
% |
Equity to assets ratio |
|
11.49 |
% |
|
12.30 |
% |
|
14.83 |
% |
Tangible common equity to
tangible asset ratio (1) |
|
8.64 |
% |
|
9.18 |
% |
|
10.87 |
% |
Book value per share |
|
$ |
24.31 |
|
|
$ |
23.98 |
|
|
$ |
22.58 |
|
Tangible book value per share
(1) |
|
$ |
17.69 |
|
|
$ |
17.29 |
|
|
$ |
15.81 |
|
(1) Non-GAAP measure. See GAAP to non-GAAP
Reconciliation.
First Choice Bancorp and Subsidiary
Condensed Consolidated Balance Sheets
(unaudited)
|
|
March 31, 2021 |
|
December 31, 2020(audited) |
|
|
(dollars in thousands, except per share amounts) |
ASSETS |
|
|
|
|
Cash and due from banks |
|
$ |
29,452 |
|
|
|
$ |
18,011 |
|
|
Interest-bearing deposits at
other banks |
|
279,994 |
|
|
|
218,370 |
|
|
Total cash and cash
equivalents |
|
309,446 |
|
|
|
236,381 |
|
|
Investment securities,
available-for-sale |
|
37,376 |
|
|
|
42,027 |
|
|
Investment securities,
held-to-maturity |
|
1,348 |
|
|
|
1,358 |
|
|
Equity securities, at fair
value |
|
2,774 |
|
|
|
2,798 |
|
|
Restricted stock investments,
at cost |
|
12,999 |
|
|
|
12,999 |
|
|
Loans held for sale |
|
12,669 |
|
|
|
9,932 |
|
|
Total loans held for
investment |
|
2,028,599 |
|
|
|
1,880,777 |
|
|
Allowance for loan losses |
|
(19,271 |
) |
|
|
(19,167 |
) |
|
Total loans held for
investment, net |
|
2,009,328 |
|
|
|
1,861,610 |
|
|
Accrued interest
receivable |
|
9,364 |
|
|
|
9,569 |
|
|
Premises and equipment |
|
1,805 |
|
|
|
2,149 |
|
|
Servicing asset |
|
2,778 |
|
|
|
2,860 |
|
|
Deferred taxes |
|
6,407 |
|
|
|
7,385 |
|
|
Goodwill |
|
73,425 |
|
|
|
73,425 |
|
|
Core deposit intangible |
|
4,768 |
|
|
|
4,956 |
|
|
Other assets |
|
16,257 |
|
|
|
15,666 |
|
|
TOTAL
ASSETS |
|
$ |
2,500,744 |
|
|
|
$ |
2,283,115 |
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Deposits: |
|
|
|
|
Noninterest-bearing
demand |
|
$ |
998,515 |
|
|
|
$ |
820,711 |
|
|
Money market, interest
checking and savings |
|
729,996 |
|
|
|
639,630 |
|
|
Time deposits |
|
167,039 |
|
|
|
173,817 |
|
|
Total deposits |
|
1,895,550 |
|
|
|
1,634,158 |
|
|
Borrowings |
|
95,000 |
|
|
|
145,000 |
|
|
Paycheck Protection Program
Liquidity Facility |
|
209,998 |
|
|
|
204,719 |
|
|
Senior secured debt |
|
— |
|
|
|
2,000 |
|
|
Accrued interest payable and
other liabilities |
|
12,784 |
|
|
|
16,497 |
|
|
Total liabilities |
|
2,213,332 |
|
|
|
2,002,374 |
|
|
Total shareholders’
equity |
|
287,412 |
|
|
|
280,741 |
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
$ |
2,500,744 |
|
|
|
$ |
2,283,115 |
|
|
|
|
|
|
|
Shares outstanding |
|
11,824,487 |
|
|
|
11,705,684 |
|
|
Book value per share |
|
$ |
24.31 |
|
|
|
$ |
23.98 |
|
|
Tangible book value per share
(1) |
|
$ |
17.69 |
|
|
|
$ |
17.29 |
|
|
|
|
|
|
|
(1) Non-GAAP measure. See GAAP to non-GAAP
Reconciliation.
First Choice Bancorp and Subsidiary
Condensed Consolidated Statements of Income
(unaudited)
|
Three Months Ended |
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
|
(dollars in thousands, except per share amounts) |
INTEREST and DIVIDEND
INCOME |
|
|
|
|
|
Interest and fees on
loans |
$ |
24,267 |
|
|
$ |
24,411 |
|
|
$ |
20,780 |
|
Interest on investment
securities |
152 |
|
|
154 |
|
|
218 |
|
Interest on deposits at other
financial institutions |
160 |
|
|
129 |
|
|
501 |
|
Dividends on FHLB and other
stock |
213 |
|
|
179 |
|
|
245 |
|
Total interest and dividend income |
24,792 |
|
|
24,873 |
|
|
21,744 |
|
INTEREST
EXPENSE |
|
|
|
|
|
Interest on savings, interest
checking and money market accounts |
338 |
|
|
344 |
|
|
1,109 |
|
Interest on time deposits |
250 |
|
|
555 |
|
|
995 |
|
Interest on borrowings |
193 |
|
|
205 |
|
|
376 |
|
Interest on PPP Liquidity
Facility |
171 |
|
|
216 |
|
|
— |
|
Interest on senior secured
notes |
9 |
|
|
20 |
|
|
91 |
|
Total interest expense |
961 |
|
|
1,340 |
|
|
2,571 |
|
Net interest income |
23,831 |
|
|
23,533 |
|
|
19,173 |
|
Provision for loan losses |
— |
|
|
100 |
|
|
2,700 |
|
Net interest income after
provision for loan losses |
23,831 |
|
|
23,433 |
|
|
16,473 |
|
NONINTEREST
INCOME |
|
|
|
|
|
Gain on sale of loans |
706 |
|
|
3,286 |
|
|
377 |
|
Service charges and fees on
deposit accounts |
441 |
|
|
468 |
|
|
555 |
|
Net servicing fees |
400 |
|
|
201 |
|
|
224 |
|
Other income |
707 |
|
|
239 |
|
|
259 |
|
Total noninterest income |
2,254 |
|
|
4,194 |
|
|
1,415 |
|
NONINTEREST
EXPENSE |
|
|
|
|
|
Salaries and employee
benefits |
7,578 |
|
|
7,884 |
|
|
7,230 |
|
Occupancy and equipment |
1,083 |
|
|
1,168 |
|
|
1,063 |
|
Data processing |
1,022 |
|
|
1,017 |
|
|
807 |
|
Professional fees |
437 |
|
|
462 |
|
|
471 |
|
Office, postage and
telecommunications |
290 |
|
|
300 |
|
|
258 |
|
Deposit insurance and
regulatory assessments |
295 |
|
|
318 |
|
|
61 |
|
Loan related |
136 |
|
|
84 |
|
|
275 |
|
Customer service related |
107 |
|
|
60 |
|
|
372 |
|
Amortization of core deposit
intangible |
188 |
|
|
192 |
|
|
193 |
|
Other expenses |
961 |
|
|
836 |
|
|
789 |
|
Total noninterest expense |
12,097 |
|
|
12,321 |
|
|
11,519 |
|
Income before taxes |
13,988 |
|
|
15,306 |
|
|
6,369 |
|
Income taxes |
4,230 |
|
|
4,512 |
|
|
1,823 |
|
Net income |
$ |
9,758 |
|
|
$ |
10,794 |
|
|
$ |
4,546 |
|
|
|
|
|
|
|
Net income per share -
diluted |
$ |
0.82 |
|
|
$ |
0.92 |
|
|
$ |
0.39 |
|
Weighted average shares -
diluted |
11,673,475 |
|
|
11,620,582 |
|
|
11,632,050 |
|
First Choice Bancorp and Subsidiary
Average Balance Sheets and Yield Analysis
|
Three Months Ended |
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
|
AverageBalance |
|
InterestIncome / Expense |
|
Yield / Cost |
|
AverageBalance |
|
InterestIncome / Expense |
|
Yield / Cost |
|
AverageBalance |
|
InterestIncome / Expense |
|
Yield / Cost |
Interest-earning
assets: |
(dollars in thousands) |
Loans (1) |
$ |
1,981,226 |
|
|
$ |
24,267 |
|
|
4.97 |
% |
|
$ |
1,885,451 |
|
|
$ |
24,411 |
|
|
5.15 |
% |
|
$ |
1,404,652 |
|
|
$ |
20,780 |
|
|
5.95 |
% |
Investment securities |
44,354 |
|
|
152 |
|
|
1.39 |
% |
|
46,292 |
|
|
154 |
|
|
1.32 |
% |
|
36,200 |
|
|
218 |
|
|
2.42 |
% |
Deposits at other financial
institutions |
257,654 |
|
|
160 |
|
|
0.25 |
% |
|
223,939 |
|
|
129 |
|
|
0.23 |
% |
|
157,743 |
|
|
501 |
|
|
1.28 |
% |
Restricted stock investments
and other bank stocks |
16,034 |
|
|
213 |
|
|
5.39 |
% |
|
15,056 |
|
|
179 |
|
|
4.73 |
% |
|
14,524 |
|
|
245 |
|
|
6.78 |
% |
Total interest-earning
assets |
2,299,268 |
|
|
24,792 |
|
|
4.37 |
% |
|
2,170,738 |
|
|
24,873 |
|
|
4.56 |
% |
|
1,613,119 |
|
|
21,744 |
|
|
5.42 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-earning
assets |
119,678 |
|
|
|
|
|
|
117,467 |
|
|
|
|
|
|
114,282 |
|
|
|
|
|
Total
assets |
$ |
2,418,946 |
|
|
|
|
|
|
$ |
2,288,205 |
|
|
|
|
|
|
$ |
1,727,401 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest checking |
$ |
373,248 |
|
|
$ |
138 |
|
|
0.15 |
% |
|
$ |
276,539 |
|
|
$ |
119 |
|
|
0.17 |
% |
|
$ |
156,407 |
|
|
$ |
262 |
|
|
0.67 |
% |
Money market accounts |
305,931 |
|
|
189 |
|
|
0.25 |
% |
|
317,173 |
|
|
214 |
|
|
0.27 |
% |
|
318,465 |
|
|
798 |
|
|
1.01 |
% |
Savings accounts |
32,080 |
|
|
11 |
|
|
0.14 |
% |
|
32,655 |
|
|
11 |
|
|
0.13 |
% |
|
28,264 |
|
|
49 |
|
|
0.70 |
% |
Time deposits |
66,457 |
|
|
119 |
|
|
0.73 |
% |
|
78,775 |
|
|
134 |
|
|
0.68 |
% |
|
117,567 |
|
|
490 |
|
|
1.68 |
% |
Brokered time deposits |
93,410 |
|
|
131 |
|
|
0.57 |
% |
|
97,749 |
|
|
421 |
|
|
1.71 |
% |
|
92,844 |
|
|
505 |
|
|
2.19 |
% |
Total interest-bearing deposits |
871,126 |
|
|
588 |
|
|
0.27 |
% |
|
802,891 |
|
|
899 |
|
|
0.45 |
% |
|
713,547 |
|
|
2,104 |
|
|
1.19 |
% |
Borrowings |
129,222 |
|
|
193 |
|
|
0.61 |
% |
|
147,663 |
|
|
205 |
|
|
0.55 |
% |
|
92,143 |
|
|
376 |
|
|
1.64 |
% |
Paycheck Protection Program
Liquidity Facility |
197,243 |
|
|
171 |
|
|
0.35 |
% |
|
244,638 |
|
|
216 |
|
|
0.35 |
% |
|
— |
|
|
— |
|
|
— |
% |
Senior secured notes |
1,022 |
|
|
9 |
|
|
3.57 |
% |
|
2,252 |
|
|
20 |
|
|
3.50 |
% |
|
8,022 |
|
|
91 |
|
|
4.56 |
% |
Total interest-bearing
liabilities |
1,198,613 |
|
|
961 |
|
|
0.33 |
% |
|
1,197,444 |
|
|
1,340 |
|
|
0.45 |
% |
|
813,712 |
|
|
2,571 |
|
|
1.27 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
917,194 |
|
|
|
|
|
|
794,542 |
|
|
|
|
|
|
631,809 |
|
|
|
|
|
Other liabilities |
17,519 |
|
|
|
|
|
|
18,170 |
|
|
|
|
|
|
17,011 |
|
|
|
|
|
Shareholders’ equity |
285,620 |
|
|
|
|
|
|
278,049 |
|
|
|
|
|
|
264,869 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity |
$ |
2,418,946 |
|
|
|
|
|
|
$ |
2,288,205 |
|
|
|
|
|
|
$ |
1,727,401 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest spread |
|
|
$ |
23,831 |
|
|
4.04 |
% |
|
|
|
$ |
23,533 |
|
|
4.11 |
% |
|
|
|
$ |
19,173 |
|
|
4.15 |
% |
Net interest margin |
|
|
|
|
4.20 |
% |
|
|
|
|
|
4.31 |
% |
|
|
|
|
|
4.78 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits |
$ |
1,788,320 |
|
|
$ |
588 |
|
|
0.13 |
% |
|
$ |
1,597,433 |
|
|
$ |
899 |
|
|
0.22 |
% |
|
$ |
1,345,356 |
|
|
$ |
2,104 |
|
|
0.63 |
% |
Total funding sources |
$ |
2,115,807 |
|
|
$ |
961 |
|
|
0.18 |
% |
|
$ |
1,991,986 |
|
|
$ |
1,340 |
|
|
0.27 |
% |
|
$ |
1,445,521 |
|
|
$ |
2,571 |
|
|
0.72 |
% |
(1) Average loans include net discounts and net
deferred loan fees and costs. Interest income on loans includes
$3.0 million, $3.4 million and $292 thousand related to
the accretion of net deferred loan fees for the quarters ended
March 31, 2021, December 31, 2020 and March 31, 2020. In
addition, interest income includes $496 thousand, $287 thousand and
$624 thousand of discount accretion on loans acquired in a business
combination, including the interest recognized on the payoff of PCI
loans, for the quarters ended March 31, 2021, December 31,
2020 and March 31, 2020.
First Choice Bancorp and Subsidiary
Loan Composition
|
March 31, 2021 |
|
December 31, 2020 |
|
Amount |
Percentage of Total |
|
Amount |
Percentage of Total |
|
(dollars in thousands) |
Construction and land
development |
$ |
229,637 |
|
|
11.2 |
% |
|
$ |
197,634 |
|
|
10.5 |
% |
Real estate: |
|
|
|
|
|
Residential |
25,505 |
|
|
1.2 |
% |
|
27,683 |
|
|
1.5 |
% |
Commercial real estate - owner occupied |
159,039 |
|
|
7.8 |
% |
|
161,823 |
|
|
8.6 |
% |
Commercial real estate - non-owner occupied |
572,414 |
|
|
28.0 |
% |
|
550,788 |
|
|
29.1 |
% |
Commercial and industrial |
366,706 |
|
|
18.1 |
% |
|
388,814 |
|
|
20.5 |
% |
SBA loans (1) |
688,197 |
|
|
33.7 |
% |
|
562,842 |
|
|
29.8 |
% |
Consumer |
3 |
|
|
— |
% |
|
1 |
|
|
— |
% |
Total loans held for
investment, net of discounts |
$ |
2,041,501 |
|
|
100.0 |
% |
|
$ |
1,889,585 |
|
|
100.0 |
% |
Net deferred loan fees
(1) |
(12,902 |
) |
|
|
|
(8,808 |
) |
|
|
Total loans held for
investment |
$ |
2,028,599 |
|
|
|
|
$ |
1,880,777 |
|
|
|
Allowance for loan losses |
(19,271 |
) |
|
|
|
(19,167 |
) |
|
|
Total loans held for
investment, net |
$ |
2,009,328 |
|
|
|
|
$ |
1,861,610 |
|
|
|
(1) Includes PPP loans with total outstanding principal of
$453.2 million and $326.7 million and net unearned fees of $10.5
million and $6.6 million at March 31, 2021 and December 31,
2020.
Total loans held for investment
|
March 31, 2021 |
December 31, 2020 |
|
(dollars in thousands) |
Gross loans held for
investment (1) |
$ |
2,048,902 |
|
|
|
$ |
1,897,599 |
|
|
Unamortized net discounts
(2) |
(7,401 |
) |
|
|
(8,014 |
) |
|
Net unamortized deferred
origination fees (1) |
(12,902 |
) |
|
|
(8,808 |
) |
|
Total loans held for
investment |
$ |
2,028,599 |
|
|
|
$ |
1,880,777 |
|
|
|
|
|
|
(1) Includes PPP loans with total
outstanding principal of $453.2 million and $326.7 million and net
unearned fees of $10.5 million and $6.6 million at March 31, 2021
and December 31, 2020.(2) Unamortized net discounts
include discounts related to the retained portion of SBA loans and
net discounts on Non-PCI acquired loans. At March 31, 2021, net
discounts related to loans acquired in the PCB acquisition totaled
$3.4 million that is expected to be accreted into interest income
over a weighted average remaining life of 3.6 years. At
December 31, 2020, net discounts related to loans acquired in
the PCB acquisition totaled $3.9 million.
Allowance for Loan losses
|
|
Three Months Ended |
|
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
|
|
(dollars in thousands) |
Balance, beginning of
period |
|
$ |
19,167 |
|
|
|
$ |
18,734 |
|
|
|
$ |
13,522 |
|
|
Provision for loan losses |
|
— |
|
|
|
100 |
|
|
|
2,700 |
|
|
Charge-offs |
|
(2 |
) |
|
|
(5 |
) |
|
|
(28 |
) |
|
Recoveries |
|
106 |
|
|
|
338 |
|
|
|
24 |
|
|
Net recoveries
(charge-offs) |
|
104 |
|
|
|
333 |
|
|
|
(4 |
) |
|
Balance, end of period |
|
$ |
19,271 |
|
|
|
$ |
19,167 |
|
|
|
$ |
16,218 |
|
|
|
|
|
|
|
|
|
Annualized net recoveries to
average loans |
|
0.02 |
|
% |
|
0.07 |
|
% |
|
— |
|
% |
Credit Quality (1)
|
|
March 31, 2021 |
|
December 31, 2020 |
|
|
(dollars in thousands) |
Accruing loans past due 90
days or more |
|
$ |
— |
|
|
$ |
— |
|
Non-accrual loans |
|
4,114 |
|
|
6,099 |
|
Troubled debt restructurings
on non-accrual |
|
77 |
|
|
347 |
|
Total nonperforming loans |
|
4,191 |
|
|
6,446 |
|
Foreclosed assets |
|
— |
|
|
— |
|
Total nonperforming
assets |
|
$ |
4,191 |
|
|
$ |
6,446 |
|
Troubled debt restructurings -
on accrual |
|
$ |
317 |
|
|
$ |
319 |
|
|
|
|
|
|
Nonperforming loans as a
percentage of total loans held for investment |
|
0.21 |
% |
|
0.34 |
% |
Nonperforming assets as a
percentage of total assets |
|
0.17 |
% |
|
0.28 |
% |
Allowance for loan losses as a
percentage of total loans held for investment |
|
0.95 |
% |
|
1.02 |
% |
Allowance for loan losses as a
percentage of total loans held for investment excluding PPP
loans |
|
1.22 |
% |
|
1.23 |
% |
Allowance for loan losses as a
percentage of nonperforming loans |
|
459.82 |
% |
|
297.35 |
% |
Allowance for loan losses as a
percentage of nonperforming assets |
|
459.82 |
% |
|
297.35 |
% |
Accruing loans held for
investment past due 30 - 89 days |
|
$ |
1 |
|
|
$ |
54 |
|
(1) Excludes purchased credit impaired loans
with a net carrying value of $722 thousand, and $761 thousand at
March 31, 2021, December 31, 2020.
GAAP to Non-GAAP Reconciliation
The following tables present a reconciliation of
non-GAAP financial measures to GAAP measures for: (1) efficiency
ratio, (2) pre-tax pre-provision income, (3) average tangible
common equity, (4) return on average tangible common equity, (5)
tangible common equity, (6) tangible assets, (7) tangible common
equity to tangible asset ratio, and (8) tangible book value per
share. We believe the presentation of certain non-GAAP financial
measures provides useful information to assess our consolidated
financial condition and consolidated results of operations and to
assist investors in evaluating our financial results relative to
our peers. These non-GAAP financial measures complement our GAAP
reporting and are presented below to provide investors and others
with information that we use to manage the business each period.
Because not all companies use identical calculations, the
presentation of these non-GAAP financial measures may not be
comparable to other similarly titled measures used by other
companies. These non-GAAP measures should be taken together with
the corresponding GAAP measures and should not be considered a
substitute of the GAAP measures.
|
Three Months Ended |
|
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
|
Efficiency
Ratio |
(dollars in thousands) |
Noninterest expense
(numerator) |
$ |
12,097 |
|
|
$ |
12,321 |
|
|
$ |
11,519 |
|
|
|
|
|
|
|
|
|
Net interest income |
$ |
23,831 |
|
|
$ |
23,533 |
|
|
$ |
19,173 |
|
|
Plus: Noninterest income |
2,254 |
|
|
4,194 |
|
|
1,415 |
|
|
Total net interest income and
noninterest income (denominator) |
$ |
26,085 |
|
|
$ |
27,727 |
|
|
$ |
20,588 |
|
|
Efficiency ratio |
46.4 |
% |
|
44.4 |
% |
|
56.0 |
% |
|
|
|
|
|
|
|
|
Pre-tax pre-provision
income |
|
|
|
|
|
|
Net interest income |
$ |
23,831 |
|
|
$ |
23,533 |
|
|
$ |
19,173 |
|
|
Noninterest income |
2,254 |
|
|
4,194 |
|
|
1,415 |
|
|
Total net interest income and
noninterest income |
26,085 |
|
|
27,727 |
|
|
20,588 |
|
|
Less: Noninterest expense |
12,097 |
|
|
12,321 |
|
|
11,519 |
|
|
Pre-tax pre-provision
income |
$ |
13,988 |
|
|
$ |
15,406 |
|
|
$ |
9,069 |
|
|
|
|
|
|
|
|
|
Return on Average
Assets, Equity, Tangible Equity |
|
|
|
|
|
|
Net income |
$ |
9,758 |
|
|
$ |
10,794 |
|
|
$ |
4,546 |
|
|
|
|
|
|
|
|
|
Average assets |
$ |
2,418,946 |
|
|
$ |
2,288,205 |
|
|
$ |
1,727,401 |
|
|
Average shareholders’
equity |
285,620 |
|
|
278,049 |
|
|
264,869 |
|
|
Less: Average intangible
assets |
78,309 |
|
|
78,501 |
|
|
79,083 |
|
|
Average tangible common
equity |
$ |
207,311 |
|
|
$ |
199,548 |
|
|
$ |
185,786 |
|
|
|
|
|
|
|
|
|
Return on average assets |
1.64 |
% |
|
1.88 |
% |
|
1.06 |
% |
|
Return on average equity |
13.86 |
% |
|
15.44 |
% |
|
6.90 |
% |
|
Return on average tangible
common equity |
19.09 |
% |
|
21.52 |
% |
|
9.84 |
% |
|
|
As of |
|
March 31, 2021 |
|
December 31, 2020 |
Tangible Common Equity
Ratio/Tangible Book Value Per Share |
(dollars in thousands, except per share amounts) |
Shareholders’ equity |
$ |
287,412 |
|
|
$ |
280,741 |
|
Less: Intangible assets |
78,193 |
|
|
78,381 |
|
Tangible common equity |
$ |
209,219 |
|
|
$ |
202,360 |
|
|
|
|
|
Total assets |
$ |
2,500,744 |
|
|
$ |
2,283,115 |
|
Less: Intangible assets |
78,193 |
|
|
78,381 |
|
Tangible assets |
$ |
2,422,551 |
|
|
$ |
2,204,734 |
|
|
|
|
|
Equity to assets ratio |
11.49 |
% |
|
12.30 |
% |
Tangible common equity to
tangible asset ratio |
8.64 |
% |
|
9.18 |
% |
|
|
|
|
Shares outstanding |
11,824,487 |
|
|
11,705,684 |
|
Book value per share |
$ |
24.31 |
|
|
$ |
23.98 |
|
Tangible book value per
share |
$ |
17.69 |
|
|
$ |
17.29 |
|
First Choice Bancorp (NASDAQ:FCBP)
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