Pacific City Financial Corporation (the “Company”) (NASDAQ:
PCB), the holding company of Pacific City Bank (the “Bank”), today
reported net income of $4.8 million, or $0.35 per diluted common
share for the second quarter of 2018, compared with $6.3 million,
or $0.46 per diluted common share, in the previous quarter and $4.9
million, or $0.36 per diluted common share, in the second quarter
of 2017.
On August 14, 2018, the Company issued and sold 2,385,000 shares
of its common stock in an underwritten public offering, for net
proceeds of approximately $43.2 million after deducting
underwriting discounts and commissions and estimated offering
expenses. The underwriters have a 30-day option to purchase up to
an additional 357,750 shares of common stock at the initial public
offering price less the underwriting discount. The Company intends
to use the proceeds for general corporate purposes, including
maintenance of its required regulatory capital, to support future
organic growth and other strategic alternatives.
Q2 2018 Highlights
- Net income totaled $4.8 million or
$0.35 per diluted common share;
- Total assets were $1.62 billion at June
30, 2018, an increase of $40.2 million, or 2.5%, from $1.58 billion
at March 31, 2018 and an increase of $177.2 million, or 12.3%, from
$1.44 billion at December 31, 2017;
- Loans held-for-investment, net of
deferred costs (fees), were $1.25 billion at June 30, 2018, an
increase of $31.6 million, or 2.6%, from $1.22 billion at March 31,
2018 and an increase of $64.9 million, or 5.5%, from $1.19 billion
at December 31, 2017; and
- Total deposits were $1.43 billion, an
increase of $45.3 million, or 3.3%, from $1.38 billion at March 31,
2018 and an increase of $176.0 million, or 14.1%, from $1.25
billion at December 31, 2017.
"We are pleased to report another strong quarter that was
highlighted by the continuing growth in our total assets supported
by strong growth in loans and deposits,” stated Henry Kim,
President and CEO. “Our total loans and deposits increased by $79.9
million and $176.0 million, respectively, which represented
annualized growth rates of 13.4% and 28.1%, respectively, for the
current year.” Mr. Kim continued, “We were able to maintain net
interest margin above 4%, while growing our deposit accounts,
despite the increase in our deposit cost due to the strong
competition in our deposit target markets, as our asset-sensitive
balance sheet continues to contribute positive impacts to our net
interest margin."
Financial Highlights As of or
For the Three Months Ended Six Months
Ended ($ in thousands, except per share data)
(Unaudited)
6/30/2018
(Unaudited)
3/31/2018
% Change (Unaudited)
6/30/2017
% Change (Unaudited)
6/30/2018
(Unaudited)
6/30/2017
% Change Net income $ 4,762 $ 6,264
-24.0 % $ 4,860 -2.0 % $ 11,026 $ 9,258 19.1 %
Diluted earnings per common share 0.35 0.46
0.36
0.81 0.68
Net interest income $ 15,882 $ 15,294 3.8 % $ 13,384 18.7 %
$ 31,176 $ 25,854 20.6 % Provision (reversal) for loan losses 425
95 347.4 % (274 ) -255.1 % 520 (472 ) -210.2 % Noninterest income
2,273 3,362 -32.4 % 3,582 -36.5 % 5,635 7,071 -20.3 % Noninterest
expense 10,940 9,631 13.6 % 8,796 24.4 % 20,571 17,317 18.8 %
Return on average assets (1) 1.20 % 1.73 % 1.49 % 1.45 %
1.46 % Return on average shareholders' equity (1), (2) 12.74 %
17.50 % 14.49 % 15.07 % 14.14 % Net interest margin (1) 4.08 % 4.33
% 4.21 % 4.20 % 4.18 % Efficiency ratio (3) 60.26 % 51.62 % 51.84 %
55.88 % 52.60 %
Financial Highlights
($ in thousands, except per share data)
(Unaudited)
6/30/2018
(Unaudited)
3/31/2018
% Change 12/31/2017
% Change (Unaudited)
6/30/2017
% Change Total assets $ 1,619,169 $ 1,578,970
2.5 % $ 1,441,999 12.3 % $ 1,363,130 18.8 % Net loans
held-for-investment 1,242,235 1,210,901 2.6 % 1,177,775 5.5 %
1,068,620 16.2 % Total deposits 1,427,245 1,381,925 3.3 % 1,251,290
14.1 % 1,178,211 21.1 % Book value per common share (2), (4) $
11.27 $ 10.97
$ 10.60
$ 10.14
Tier 1 leverage ratio (consolidated) 9.58 % 10.09 % 10.01 % 10.37 %
Total shareholders' equity to total assets (2) 9.35 % 9.32 % 9.86 %
9.97 %
(1)
Ratios are presented on an annualized
basis.
(2)
The Company did not have any intangible
equity component for the presented periods.
(3)
The ratios are calculated by dividing
noninterest expense by the sum of net interest income and
noninterest income.
(4)
The ratios are calculated by dividing
total shareholders' equity by the number of outstanding common
shares.
Result of Operations
Net Income
Net income was $4.8 million for the three months ended June 30,
2018, a decrease of $1.5 million, or 24.0%, from $6.3 million for
the three months ended March 31, 2018, and a decrease of $98
thousand, or 2.0%, from $4.9 million for the three months ended
June 30, 2017. Diluted earnings per common share was $0.35, $0.46
and $0.36, respectively, for the three months ended June 30, 2018,
March 31, 2018 and June 30, 2017. These decreases were primarily
due to increases in noninterest expense and provision for loan
losses and a decrease in noninterest income, partially offset by an
increase in net interest income and a decrease in income tax
expense. For the six months ended June 30, 2018, net income was
$11.0 million, an increase of $1.8 million, or 19.1%, from $9.3
million for the six months ended June 30, 2017. Diluted earnings
per common share was $0.81 and $0.68 for the six months ended June
30, 2018 and 2017, respectively. The increase was primarily due to
an increase in net interest income and a decrease in income tax
expense, partially offset by increases in noninterest expense and
provision for loan losses and a decrease in noninterest income.
Net Interest Income and Net Interest Margin
Net interest income was $15.9 million for the three months ended
June 30, 2018, an increase of $588 thousand, or 3.8%, from $15.3
million for the three months ended March 31, 2018, and an increase
of $2.5 million, or 18.7%, from $13.4 million for the three months
ended June 30, 2017. For the six months ended June 30, 2018, net
interest income was $31.2 million, an increase of $5.3 million, or
20.6%, from $25.9 million for the six months ended June 30, 2017.
These increases were primarily due to an increase in average
balance of interest-earning assets, partially offset by increases
in average balance and average cost of interest-bearing
liabilities.
Interest income on loans was $18.6 million for the three months
ended June 30, 2018, an increase of $1.2 million, or 6.7%, from
$17.4 million for the three months ended March 31, 2018, and an
increase of $3.8 million, or 25.7%, from $14.8 million for the
three months ended June 30, 2017. For the six months ended June 30,
2018, interest income on loans was $36.1 million, an increase of
$7.4 million, or 25.7%, from $28.7 million for the six months ended
June 30, 2017. These increases were primarily due to increases in
average balance and average yield of total loans. The increase in
average yield on total loans was due to the Company's high
proportion of variable rates loans that reprice in the current
rising interest rate environment. Average balance of loans was
$1.24 billion for the three months ended June 30, 2018, compared
with $1.22 billion for the three months ended March 31, 2018 and
$1.08 billion for the three months ended June 30, 2017, and average
yield was 6.04% for the three months ended June 30, 2018 compared
with 5.80% for the three months ended March 31, 2018 and 5.51% for
the three months ended June 30, 2017. For the six months ended June
30, 2018, average balance and average yield were $1.23 billion and
5.92%, respectively, compared with $1.07 billion and 5.42%,
respectively, for the six months ended June 30, 2017.
The following table presents a composition of total loans by
interest rate type accompanied with the weighted-average
contractual rates as of dates indicated:
Loan Rate Composition
(Unaudited)
6/30/2018
(Unaudited)
3/31/2018
12/31/2017 (Unaudited)
6/30/2017
% to Gross Loans
Weighted-Average
Contractual Interest Rate
% to Gross Loans
Weighted-Average
Contractual Interest Rate
% to Gross Loans
Weighted-Average
Contractual Interest Rate
% to Gross Loans
Weighted-Average
Contractual Interest Rate
Fixed rate loans 26.6 % 5.08 % 26.8 % 5.07 % 26.6 % 5.09 % 28.1 %
5.09 % Variable rate loans 73.4 % 5.85 % 73.2 % 5.62 % 73.4 % 5.38
% 71.9 % 5.16 %
Interest income on investment securities was $869 thousand for
the three months ended June 30, 2018, an increase of $21 thousand,
or 2.5%, from $848 thousand for the three months ended March 31,
2018 and an increase of $281 thousand, or 47.8%, from $588 thousand
for the three months ended June 30, 2017. For the six months ended
June 30, 2018, interest income on investment securities was $1.7
million, an increase of $621 thousand, or 56.7%, from $1.1 million
for the six months ended June 30, 2017. The increase compared with
the three months ended March 31, 2018 was primarily due to an
increase in average yield, partially offset by a decrease in
average balance. The increases compared with the three and six
month ended June 30, 2017 were primarily due to increases in
average balance and average yield. The increase in average yield
was due to additional purchases of investment securities in the
current rising rate environment. Average balance of investment
securities was $147.9 million for the three months ended June 30,
2018, compared with $149.4 million for the three months ended March
31, 2018 and $115.3 million for the three months ended June 30,
2017, and average yield was 2.36% for the three months ended June
30, 2018 compared with 2.30% for the three months ended March 31,
2018 and 2.07% for the three months ended June 30, 2017. For the
six months ended June 30, 2018, average balance and average yield
were $148.7 million and 2.33%, respectively, compared with $109.8
million and 2.01%, respectively, for the six months ended June 30,
2018.
Total interest expense was $4.5 million for the three months
ended June 30, 2018, an increase of $1.1 million, or 33.8%, from
$3.3 million for the three months ended March 31, 2018 and an
increase $2.2 million, or 93.6%, compared with $2.3 million in the
three months ended June 30, 2017. For the six months ended June 30,
2018, total interest expense was $7.8 million, an increase of $3.3
million or 75.1%, from $4.5 million for the six months ended June
30, 2017. These increases were primarily due to increases in
average balance and average cost of interest-bearing liabilities
that resulted from the Company's deposit promotion during the three
months ended March 31, 2018 as well as a continuous growth in
deposits. During the promotion, the Company raised $122.7 million
of interest-bearing deposits at a weighted average rate of
2.21%.
Net interest margin was 4.08% for the three months ended June
30, 2018 compared with 4.33% for the three months ended March 31,
2018, and 4.21% for the year-ago quarter. For the six months ended
June 30, 2018, net interest margin was 4.20% compared with 4.18%
for the six months ended June 30, 2017.
Provision for Loan Losses
Provision (reversal) for loan losses was $425 thousand for the
three months ended June 30, 2018 compared with $95 thousand for the
three months ended March 31, 2018 and $(274) thousand for the three
months ended June 30, 2017. For the six months ended June 30, 2018,
provision for loan losses was $520 thousand compared with $(472)
thousand for the six months ended June 30, 2017. The increases were
primarily due to an increase in loans held-for-investment balance.
During the three months June 30, 2018, the Company recorded a net
charge-off of $175 thousand compared with a net recovery of $52
thousand for the three months ended March 31, 2018 and a net
charge-off of $12 thousand for the three months ended June 30,
2017. Allowance for loan losses to total loans held-for-investment
ratio was 1.01% at June 30, 2018 and March 31, 2018, 1.03% at
December 31, 2017, and 1.02% at June 30, 2017.
Noninterest Income
Noninterest income was $2.3 million for the three months ended
June 30, 2018, a decrease of $1.1 million, or 32.4%, from $3.4
million for the three months ended March 31, 2018 and a decrease of
$1.3 million, or 36.5%, from $3.6 million for the three months
ended June 30, 2017. For the six months ended June 30, 2018,
noninterest income was $5.6 million, a decrease of $1.4 million, or
20.3%, from $7.1 million for the six months ended June 30, 2017.
These decreases were primarily due to a decrease in gain on sale of
SBA loans. At June 30, 2018, SBA loan sales commitments of $16.7
million were not settled, all of which were included in loans
held-for-sale at June 30, 2018 and subsequently settled during
early July 2018. The Company sold guaranteed portion of SBA loans
of $12.6 million, $29.9 million, $32.2 million, respectively, and
recognized gain on sale of SBA loans of $863 thousand, $2.0 million
and $2.3 million, respectively, for the three months ended June 30,
2018, March 31, 2018 and June 30, 2017. For the six months ended
June 30, 2018 and 2017, The Company sold guaranteed portion of SBA
loans of $42.5 million and $68.3 million, respectively, and
recognized gain on sale of SBA loans of $2.9 million and $4.6
million, respectively.
Noninterest Expense
Noninterest expense was $10.9 million for the three months ended
June 30, 2018, an increase of $1.3 million, or 13.6%, from $9.6
million for the three months ended March 31, 2018 and an increase
of $2.1 million, or 24.4%, from $8.8 million for the three months
ended June 30, 2017. For the six months ended June 30, 2018,
noninterest expense was $20.6 million, an increase of $3.3 million,
or 18.8%, from $17.3 million for the six months ended June 30,
2017. These increases were primarily due to growth in operations,
as well as increases of additional legal and professional expense
related to the preparation and filing of our S-1 registration
statement with the SEC and listing our shares of common stock on
the Nasdaq Global Select Market, and a reimbursement paid to SBA.
During the three months ended June 30, 2018, the SBA requested us
to reimburse for a SBA loan guarantee previously paid by the SBA on
a loan we originated in 2007 that subsequently defaulted, which
ultimately was determined to be ineligible for SBA guaranty. We
incurred a one-time expense of $577 thousand for this reimbursement
and a write-off of certain receivables related to collection
activities of the loan.
Efficiency ratio was 60.26% for the three months ended June 30,
2018 compared with 51.62% for the three months ended March 31, 2018
and 51.84% for the three months ended June 30, 2017. For the six
months ended June 30, 2018, efficiency ratio was 55.88% compared
with 52.60% for the six months ended June 30, 2017.
Income Tax Provision
Effective income tax rate was 29.9% for the three and six months
ended June 30, 2018, as well as the previous quarter, compared with
42.4% for the three and six months ended June 30, 2017. The
decrease was primarily due to the enactment of H.R. 1, also known
as the Tax Cuts and Jobs Act, on December 22, 2017. Beginning in
2018, H.R. 1 reduced the U.S. federal corporate tax rate from 35%
to 21% and changed or limited certain tax deductions.
Balance Sheet
Total Assets
Total assets were $1.62 billion at June 30, 2018, an increase of
$40.2 million, or 2.5%, from $1.58 billion at March 31, 2018, an
increase of $177.2 million, or 12.3%, from $1.44 billion at
December 31, 2017, and an increase of $256.0 million, or 18.8%,
from $1.36 billion at June 30, 2017.
Loans
Loans held-for-investment, net of deferred costs (fees), were
$1.25 billion at June 30, 2018, an increase of $31.6 million, or
2.6%, from $1.22 billion at March 31, 2018 and an increase of $64.9
million, or 5.5%, from $1.19 billion at December 31, 2017, and an
increase of $175.2 million, or 16.2%, from $1.08 billion at June
30, 2017. The increase for the three months ended June 30, 2018 was
primarily due to new funding of $137.9 million and advances on
lines of credit of $38.3 million, partially offset by pay-downs and
pay-offs of $110.8 million, sales of $20.1 million and charge-offs
of $296 thousand. The increase for the six months ended June 30,
2018 was primarily due to new funding of $271.6 million and
advances on lines of credit of $69.7 million, partially offset by
pay-downs and pay-offs of $209.3 million, sales of $52.3 million
and charge-offs of $435 thousand.
The table presents a composition of total loans by loan type as
of the dates indicated:
Loan Composition ($ in thousands)
(Unaudited)
6/30/2018
(Unaudited)
3/31/2018
% Change 12/31/2017
% Change (Unaudited)
6/30/2017
% Change Real estate loans: Commercial
property $ 674,599 $ 675,729 -0.2 % $ 662,840 1.8 % $ 606,952 11.1
% Residential property 197,598 184,752 7.0 % 168,898 17.0 % 143,117
38.1 % SBA property 133,081 134,240 -0.9 % 130,438 2.0 % 115,683
15.0 % Construction 28,659 26,089 9.9 % 23,215 23.5 % 22,355 28.2 %
Commercial and industrial loans: Commercial term 80,791 79,763 1.3
% 77,438 4.3 % 77,998 3.6 % Commercial lines of credit 72,799
58,195 25.1 % 60,850 19.6 % 49,473 47.1 % SBA commercial term
28,276 29,337 -3.6 % 30,199 -6.4 % 29,463 -4.0 % International
7,734 2,115 265.7 % 1,920 302.8 % 1,638 372.2 % Consumer loans
30,775 32,704 -5.9 %
33,870 -9.1 %
32,375 -4.9 % Loans
held-for-investment 1,254,312 1,222,924 2.6 % 1,189,668 5.4 %
1,079,054 16.2 % Deferred loan costs (fees)
544
348 56.3 %
331 64.4 %
595 -8.6 % Loans held-for-investment, net of
deferred loan costs (fees) (1) 1,254,856 1,223,272 2.6 % 1,189,999
5.5 % 1,079,649 16.2 % Loans held-for-sale
20,331 6,182 228.9 %
5,297 283.8 %
9,888 105.6 % Total
loans
$ 1,275,187 $
1,229,454 3.7 %
$ 1,195,296
6.7 %
$ 1,089,537 17.0 %
(1)
Referred as total loans
held-for-investment elsewhere in this report.
Non-Performing Assets
Non-performing loans (“NPLs”) were $2.0 million at June 30,
2018, a decrease of $371 thousand, or 15.5%, from $2.4 million at
March 31, 2018 and a decrease of $1.2 million, or 37.4%, from $3.2
million at December 31, 2017, but an increase of $584 thousand, or
40.5%, from $1.4 million at June 30, 2017. NPLs to total loans
held-for-investment ratio was 0.16% at June 30, 2018, 0.20% at
March 31, 2018, 0.27% at December 31, 2017, and 0.13% at June 30,
2017.
The Company had no other real estate owned (“OREO”) at June 30,
2018 and March 31, 2018 compared with $99 thousand at December 31,
2017 and $209 thousand at June 30, 2017. The Company sold an OREO
with a gain of $3 thousand during the three months ended March 31,
2018.
Non-performing assets (“NPAs”), which consist of NPL and OREO,
and the NPAs to total assets ratio were $2.0 million and 0.13%,
respectively, at June 30, 2018, $2.4 million and 0.15%,
respectively, at March 31, 2018, $3.3 million and 0.23%,
respectively, at December 31, 2017, and $1.7 million and 0.12%,
respectively, at June 30, 2017.
The following table presents compositions of NPLs and NPAs as of
the dates indicated:
NPLs and NPAs ($ in thousands)
(Unaudited)
6/30/2018
(Unaudited)
3/31/2018
% Change 12/31/2017
% Change (Unaudited)
6/30/2017
% Change
Nonaccrual loans:
Commercial property $ 240 $ 311 -22.8 % $ 318
-24.5 % $ 338 -29.0 % Residential property - 730 -100.0 % 730
-100.0 % - - SBA property 1,203 1,022 17.7 % 1,810 -33.5 % 483
149.1 % Commercial term - - - 4 -100.0 % 128 -100.0 % Commercial
lines of credit 39 - - 10 290.0 % 41 -4.9 % SBA commercial term 519
318 63.2 % 338 53.6 % 449 15.6 % Consumer loans
25 16 56.3 %
24 4.2 %
3 733.3 %
Total nonaccrual loans held-for-investment 2,026 2,397 -15.5 %
3,234 -37.4 % 1,442 40.5 % Loans past due 90 days or more and still
accruing
- -
-
- -
- -
NPLs 2,026 2,397 -15.5 % 3,234 -37.4 % 1,442 40.5 % OREO
- - -
99 -100.0 %
209
-100.0 % NPAs
$ 2,026
$ 2,397 -15.5 %
$
3,333 -39.2 %
$ 1,651
22.7 % Loans modified as troubled debt restructurings (TDRs)
Accruing TDRs $ 453 $ 554 -18.2 % $ 592 -23.5 % $ 1,704 -73.4 %
Nonaccrual TDRs
548
595 -7.9 %
1,675
-67.3 %
695 -21.2 % Total TDRs
$ 1,001 $
1,149 -12.9 %
$ 2,267
-55.8 %
$ 2,399 -58.3 %
NPLs to total loans held-for-investment 0.16 % 0.20 % 0.27 % 0.13 %
NPAs to total assets 0.13 % 0.15 % 0.23 % 0.12 %
Classified Assets
Classified loans were $4.3 million, a decrease of $45 thousand,
or 1.0%, from $4.4 million at March 31, 2018, a decrease of $648
thousand, or 13.0%, from $5.0 million at December 31, 2017 and a
decrease of $2.0 million, or 31.7%, from $6.4 million at June 30,
2017. Classified assets, which consist of classified loans and
OREO, and the classified assets to total assets ratios were $4.3
million and 0.27%, respectively, at June 30, 2018, $4.4 million and
0.28%, respectively, at March 31, 2018, $5.1 million and 0.35%,
respectively, at December 31, 2017, and $6.6 million and 0.48%,
respectively, at June 30, 2017.
Investment Securities
Total investment securities were $152.5 million, an increase of
$5.7 million, or 3.9%, from $146.8 million at March 31, 2018, an
increase of $1.7 million, or 1.2%, from $150.8 million at December
31, 2017 and an increase of $23.8 million, or 18.5%, from $128.7
million at June 30, 2017. The increase for the three months ended
June 30, 2018 was primarily due to purchases of $12.8 million,
partially offset by principal pay-downs of $5.5 million, net
premium amortization of $209 thousand and a decrease in fair value
of securities available-for-sale of $514 thousand during the three
months ended June 30, 2018. The increase for the six months ended
June 30, 2018 was primarily due to purchases of $16.1 million,
partially offset by principal pay-downs of $12.0 million, net
premium amortization of $424 thousand and a decrease in fair value
of securities available-for-sale of $2.0 million.
Deposits
Total deposits were $1.43 billion at June 30, 2018, an increase
of $45.3 million, or 3.3%, from $1.38 billion at March 31, 2018, an
increase of $176.0 million, or 14.1%, from $1.25 billion at
December 31, 2017 and an increase of $249.0 million, or 21.1%, from
$1.18 billion at June 30, 2017. The increase for the three months
ended June 30, 2018 was primarily due to new accounts of $118.6
million, partially offset by closed accounts of $71.4 million and
net balance decreases of $2.1 million. The increase for the six
months ended June 30, 2018 was primarily due to new accounts of
$383.4 million, partially offset by closed accounts of $168.7
million and net balance decreases of $39.0 million. During the
three months ended March 31, 2018, the Company launched a deposit
promotion that resulted new interest-bearing deposits of $122.7
million at a weighted average rate of 2.21%.
The following table presents deposit mix as of the dates
indicated:
Deposit Mix (Unaudited)
6/30/2018
(Unaudited)
3/31/2018
12/31/2017
(Unaudited)
6/30/2017
($ in thousands) Amount % to Total
Amount % to Total Amount % to
Total Amount % to Total
Noninterest-bearing demand deposits $ 347,342 24.3 % $ 321,109 23.2
% $ 319,026 25.5 % $ 318,901 27.1 % Interest-bearing deposits NOW
accounts 13,812 1.0 % 9,716 0.7 % 10,324 0.8 % 9,195 0.8 % Money
market accounts 259,098 18.2 % 272,208 19.7 % 299,390 23.9 %
317,409 26.9 % Savings 9,886 0.7 % 8,181 0.6 % 8,164 0.7 % 8,668
0.7 % Time deposits under $250,000 393,053 27.5 % 382,826 27.8 %
295,274 23.6 % 267,655 22.8 % Time deposits of $250,000 or more
251,554 17.6 % 235,385 17.0 % 166,612 13.3 % 143,877 12.2 % State
and brokered time deposits
152,500
10.7 % 152,500
11.0 % 152,500
12.2 % 112,506
9.5 % Total interest-bearing deposits
1,079,903 75.7 %
1,060,816 76.8 %
932,264 74.5 %
859,310 72.9 % Total
deposits
$ 1,427,245 100.0
% $ 1,381,925
100.0 % $
1,251,290 100.0 %
$ 1,178,211 100.0
%
Borrowings
Borrowings from Federal Home Loan Bank (“FHLB”) were $30.0
million at June 30, 2018 and $40.0 million at March 31, 2018,
December 31, 2017 and June 30, 2017. At June 30, 2018, borrowings
from FHLB bore fixed interest rates with original maturity terms
ranging from two to five years.
Shareholders’ Equity
Shareholders’ equity were $151.4 million, an increase of $4.2
million, or 2.9%, from $147.2 million at March 31, 2018, an
increase of $9.2 million, or 6.5%, from $142.2 million at December
31, 2017 and an increase of $15.5 million, or 11.4%, from $136.0
million at June 30, 2017.
Capital Ratios
The following table presents capital ratios for the Company and
the Bank as of dates indicated:
Capital Ratios ($ in thousands)
(Unaudited)
6/30/2018
(Unaudited)
3/31/2018
12/31/2017 (Unaudited)
6/30/2017
Pacific City Financial Corporation Common tier 1 capital (to
risk-weighted assets) 12.43 % 12.32 % 12.15 % 12.64 % Total capital
(to risk-weighted assets) 13.46 % 13.36 % 13.20 % 13.69 % Tier 1
capital (to risk-weighted assets) 12.43 % 12.32 % 12.15 % 12.64 %
Tier 1 capital (to average assets) 9.58 % 10.09 % 10.01 % 10.37 %
Pacific City Bank Common tier 1 capital (to risk-weighted assets)
12.37 % 12.25 % 12.06 % 12.56 % Total capital (to risk-weighted
assets) 13.40 % 13.29 % 13.12 % 13.61 % Tier 1 capital (to
risk-weighted assets) 12.37 % 12.25 % 12.06 % 12.56 % Tier 1
capital (to average assets) 9.53 % 10.03 % 9.94 % 10.31 %
About Pacific City Financial Corporation
Pacific City is the bank holding company for Pacific City Bank,
a $1.6 billion asset bank, offering a full suite of commercial
banking services through its wholly owned subsidiary, Pacific City
Bank, a California state chartered bank, to small to medium-sized
businesses, individuals and professionals, primarily in Southern
California, and predominantly in Korean-American and other minority
communities.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements. These
forward-looking statements represent plans, estimates, objectives,
goals, guidelines, expectations, intentions, projections and
statements of our beliefs concerning future events, business plans,
objectives, expected operating results and the assumptions upon
which those statements are based. Forward-looking statements
include without limitation, any statement that may predict,
forecast, indicate or imply future results, performance or
achievements, and are typically identified with words such as
‘‘may,’’ “could,” “should,” “will,” “would,” “believe,”
“anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or
words or phases of similar meaning. We caution that the
forward-looking statements are based largely on our expectations
and are subject to a number of known and unknown risks and
uncertainties that are subject to change based on factors which
are, in many instances, beyond our control. Actual results,
performance or achievements could differ materially from those
contemplated, expressed, or implied by the forward-looking
statements. Any forward-looking statements presented herein are
made only as of the date of this press release, and we do not
undertake any obligation to update or revise any forward-looking
statements to reflect changes in assumptions, the occurrence of
unanticipated events, or otherwise, except as required by law.
PACIFIC CITY FINANCIAL CORPORATION AND
SUBSIDIARYConsolidated Balance Sheets(in thousands,
except share data)
(Unaudited)
6/30/2018
(Unaudited)
3/31/2018
% Change 12/31/2017
% Change (Unaudited)
6/30/2017
% Change Assets
Cash and due from banks $ 33,800 $ 16,765 101.6 % $ 16,662 102.9 %
$ 22,591 49.6 % Interest-bearing deposits in other financial
institutions 134,846 164,788 -18.2 %
56,996 136.6 % 99,035 36.2 % Total cash
and cash equivalents 168,646 181,553
-7.1 % 73,658 129.0 % 121,626 38.7 %
Securities available-for-sale, at fair value 132,106 125,940 4.9 %
129,689 1.9 % 110,015 20.1 % Securities held-to-maturity
20,390 20,826 -2.1 % 21,070 -3.2
% 18,663 9.3 % Total investment securities
152,496 146,766 3.9 % 150,759
1.2 % 128,678 18.5 % Loans held-for-sale 20,331 6,182
228.9 % 5,297 283.8 % 9,888 105.6 % Loans held-for-investment, net
of deferred loan costs (fees) 1,254,856 1,223,272 2.6 % 1,189,999
5.5 % 1,079,649 16.2 % Allowance for loan losses (12,621 )
(12,371 ) 2.0 % (12,224 ) 3.2 % (11,029 ) 14.4
% Net loans held-for-investments 1,242,235
1,210,901 2.6 % 1,177,775 5.5 %
1,068,620 16.2 % Premises and equipment, net 4,892 5,069
-3.5 % 4,723 3.6 % 4,317 13.3 % Federal Home Loan Bank and other
restricted stock, at cost 7,433 6,589 12.8 % 6,589 12.8 % 6,589
12.8 % Other real estate owned, net of valuation allowance - - - 99
-100.0 % 209 -100.0 % Deferred tax assets, net 4,360 4,239 2.9 %
3,847 13.3 % 5,791 -24.7 % Servicing assets 8,390 8,890 -5.6 %
8,973 -6.5 % 8,801 -4.7 % Accrued interest receivable and other
assets 10,386 8,781 18.3 %
10,279 1.0 % 8,611 20.6 %
Total assets
$ 1,619,169 $ 1,578,970
2.5 %
$ 1,441,999 12.3 %
$
1,363,130 18.8 %
Liabilities Deposits:
Noninterest-bearing demand $ 347,342 $ 321,109 8.2 % $ 319,026 8.9
% $ 318,901 8.9 % Savings, NOW and money market accounts 282,796
290,105 -2.5 % 317,878 -11.0 % 335,272 -15.7 % Time deposits under
$250,000 445,553 435,326 2.3 % 347,774 28.1 % 280,161 59.0 % Time
deposits $250,000 and over 351,554 335,385
4.8 % 266,612 31.9 % 243,877
44.2 % Total deposits 1,427,245 1,381,925 3.3 % 1,251,290 14.1 %
1,178,211 21.1 % Borrowings from Federal Home Loan Bank 30,000
40,000 -25.0 % 40,000 -25.0 % 40,000 -25.0 % Accrued interest
payable and other liabilities 10,493 9,812
6.9 % 8,525 23.1 % 8,966 17.0 %
Total liabilities 1,467,738 1,431,737
2.5 % 1,299,815 12.9 % 1,227,177 19.6 %
Commitments and contingent liabilities
Shareholders’ Equity
Common stock 125,579 125,511 0.1 % 125,430 0.1 % 125,354 0.2 %
Additional paid-in capital 3,206 3,072 4.4 % 2,941 9.0 % 2,611 22.8
% Retained earnings 25,258 20,898 20.9 % 15,036 68.0 % 8,454 198.8
% Accumulated other comprehensive loss, net (2,612 )
(2,248 ) 16.2 % (1,223 ) 113.6 % (466 ) 460.5 % Total
shareholders’ equity 151,431 147,233
2.9 % 142,184 6.5 % 135,953 11.4 %
Total liabilities and shareholders’ equity $
1,619,169 $ 1,578,970 2.5 %
$ 1,441,999 12.3 %
$ 1,363,130
18.8 % Outstanding common share 13,435,214 13,424,777
13,417,899 13,412,059 Book value per common share (1) $ 11.27 $
10.97 $ 10.60 $ 10.14 Total loan to total deposit ratio 89.35 %
88.97 % 95.53 % 92.47 % Noninterest-bearing deposits to total
deposits 24.34 % 23.24 % 25.50 % 27.07 %
(1)
The ratios are calculated by dividing
total shareholders' equity by the number of outstanding common
shares. The Company did not have any intangible equity component
for the presented periods.
Pacific City Financial Corporation and
Subsidiary
Consolidated Statements of
Income
($ in thousands, except share and per
share data)
Three Months Ended Six Months
Ended 6/30/2018
3/31/2018 % Change
6/30/2017 % Change
6/30/2018 6/30/2017
% Change Interest income: Interest and fees on
loans $ 18,610 $ 17,440 6.7 % $ 14,807 25.7 % $ 36,050 $ 28,684
25.7 % Interest on investment securities 869 848 2.5 % 588 47.8 %
1,717 1,096 56.7 % Interest and dividend on other interest-earning
assets 865 340 154.4 % 294
194.2 % 1,205 526 129.1 % Total
interest income 20,344 18,628 9.2 % 15,689 29.7 % 38,972 30,306
28.6 % Interest expense: Interest on deposits 4,292 3,166 35.6 %
2,302 86.4 % 7,458 4,449 67.6 % Interest on other borrowings
170 168 1.2 % 3 5566.7 %
338 3 11166.7 % Total interest expense
4,462 3,334 33.8 % 2,305 93.6 %
7,796 4,452 75.1 % Net interest income
15,882 15,294 3.8 % 13,384 18.7 % 31,176 25,854 20.6 % Provision
(reversal) for loan losses 425 95 347.4
% (274 ) -255.1 % 520 (472 ) -210.2 %
Net interest income after provision (reversal) for loan losses
15,457 15,199 1.7 % 13,658 13.2 % 30,656 26,326 16.4 % Noninterest
income: Gain on sale of SBA loans 863 2,049 -57.9 % 2,320 -62.8 %
2,912 4,635 -37.2 % Gain on sale of residential property loans 170
22 672.7 % 50 240.0 % 192 79 143.0 % Gain on sale of other loans -
45 -100.0 % - - 45 - - Service charges and fees on deposits 376 349
7.7 % 337 11.6 % 725 687 5.5 % Servicing income 585 626 -6.5 % 601
-2.7 % 1,211 1,167 3.8 % Other income 279 271
3.0 % 274 1.8 % 550 503
9.3 % Total noninterest income 2,273 3,362 -32.4 % 3,582
-36.5 % 5,635 7,071 -20.3 % Noninterest expense: Salaries and
employee benefits 6,153 6,246 -1.5 % 5,574 10.4 % 12,399 11,095
11.8 % Occupancy and equipment 1,246 1,144 8.9 % 1,090 14.3 % 2,390
2,186 9.3 % Professional fees 988 523 88.9 % 476 107.6 % 1,511 896
68.6 % Marketing and business promotion 541 388 39.4 % 419 29.1 %
929 720 29.0 % Data processing 295 302 -2.3 % 261 13.0 % 597 510
17.1 % Director fees and expenses 211 230 -8.3 % 180 17.2 % 441 343
28.6 % Loan related expense 63 59 6.8 % 92 -31.5 % 122 203 -39.9 %
Regulatory assessments 145 132 9.8 % 103 40.8 % 277 201 37.8 %
Other expenses 1,298 607 113.8 %
601 116.0 % 1,905 1,163 63.8 %
Total noninterest expense 10,940 9,631
13.6 % 8,796 24.4 % 20,571
17,317 18.8 % Income before income taxes 6,790 8,930 -24.0 %
8,444 -19.6 % 15,720 16,080 -2.2 % Income tax expense 2,028
2,666 -23.9 % 3,584 -43.4 %
4,694 6,822 -31.2 %
Net income
$ 4,762 $ 6,264 -24.0 %
$ 4,860 -2.0 %
$ 11,026
$ 9,258 19.1 % Earnings per share
available to common shareholders, basic $ 0.35 $ 0.47 $ 0.36 $ 0.82
$ 0.69 Earnings per share available to common shareholders, diluted
$ 0.35 $ 0.46 $ 0.36 $ 0.81 $ 0.68 Weighted-average common
shares outstanding, basic 13,432,775 13,418,259 13,408,282
13,425,557 13,401,859 Weighted-average common shares outstanding,
diluted 13,628,677 13,586,759 13,542,538 13,607,834 13,523,128
Dividend paid per common share $ 0.03 $ 0.03 $ 0.03 $ 0.06 $
0.06 Common stock dividend payout ratio (1) 8.57 % 6.38 % 8.33 %
7.32 % 8.70 % Return on average assets (2) 1.20 % 1.73 % 1.49 %
1.45 % 1.46 % Return on average shareholders’ equity (2), (3) 12.74
% 17.50 % 14.49 % 15.07 % 14.14 % Efficiency ratio (2), (4) 60.26 %
51.62 % 51.84 % 55.88 % 52.60 %
(1)
The ratios are calculated by dividing
dividends declared per common share by basic earnings per
share.
(2)
Ratios are presented on an annualized
basis.
(3)
The Company did not have any intangible
equity component for the presented periods.
(4)
The ratios are calculated by dividing
noninterest expense by the sum of net interest income and
noninterest income.
Pacific City Financial Corporation and
Subsidiary
Average Balance, Average Yield, and
Average Rate
($ in thousands)
Three Months Ended 6/30/2018
3/31/2018 6/30/2017
Average Balance
Interest Income/
Expense
Avg. Yield/Rate
Average Balance
Interest Income/
Expense
Avg. Yield/Rate
Average Balance
Interest Income/
Expense
Avg. Yield/Rate Assets Interest-earning
assets: Total loans (1) $ 1,236,075 $ 18,610 6.04 % $ 1,219,867 $
17,440 5.80 % $ 1,077,835 $ 14,807 5.51 % U.S. government agency
securities 23,212 141 2.44 % 24,350 137 2.28 % 24,753 145 2.35 %
Mortgage-backed securities 65,708 378 2.31 % 67,484 391 2.35 %
51,808 246 1.90 % Collateralized mortgage obligation 52,455 309
2.36 % 50,974 280 2.23 % 29,977 149 1.99 % Municipal bonds (2)
6,552 41 2.51 % 6,583 40 2.46 % 8,777 48 2.19 % Other
interest-earning assets 175,615 865 1.98 %
63,981 340 2.16 % 80,676
294 1.46 % Total interest-earning assets 1,559,617
20,344 5.23 % 1,433,239 18,628 5.27 %
1,273,826 15,689 4.94 % Noninterest-earning
assets: Cash and cash equivalents 18,530 20,329 16,085 Allowance
for loan losses (12,446 ) (12,366 ) (11,266 ) Other assets
27,460 26,746 26,839 Total
noninterest-earning assets 33,544 34,709
31,658 Total assets $ 1,593,161 $
1,467,948 $ 1,305,484
Liabilities and
Shareholders’ Equity Interest-bearing liabilities: Deposits:
NOW and money market accounts $ 279,515 773 1.11 % $ 297,947 760
1.03 % $ 323,657 813 1.01 % Savings 8,739 6 0.28 % 8,632 6 0.28 %
8,810 6 0.27 % Time deposits 790,430 3,513
1.78 % 654,124 2,400 1.49 % 523,502
1,483 1.14 % Total interest-bearing deposits
1,078,684 4,292 1.60 % 960,703 3,166 1.34 % 855,969 2,302 1.08 %
Borrowings from Federal Home Loan Bank 39,782
170 1.71 % 40,000 168 1.70 % 879
3 1.37 % Total interest-bearing liabilities 1,118,466
4,462 1.60 % 1,000,703 3,334
1.35 % 856,848 2,305 1.08 %
Noninterest-bearing liabilities Noninterest-bearing demand 315,232
313,660 305,267 Other liabilities 9,533 8,384
8,837 Total noninterest-bearing liabilities
324,765 322,044 314,104
Total liabilities 1,443,231 1,322,747 1,170,952 Total shareholders'
equity 149,930 145,201 134,532
Total liabilities and shareholders’ equity $ 1,593,161
$ 1,467,948 $ 1,305,484 Net interest income $
15,882 $ 15,294 $ 13,384 Net interest spread (3) 3.63 % 3.92 % 3.86
% Net interest margin (4) 4.08 % 4.33 % 4.21 % Total deposits $
1,393,916 $ 4,292 1.24 % $ 1,274,363 $ 3,166 1.01 % $ 1,161,236 $
2,302 0.80 % Total funding (5) $ 1,433,698 $ 4,462 1.25 % $
1,314,363 $ 3,334 1.03 % $ 1,162,115 $ 2,305 0.80 %
(1)
Total loans include both loans
held-for-sale and loans held-to-investment, net of deferred loan
costs (fees).
(2)
The yield on municipal bonds has not been
computed on a tax-equivalent basis.
(3)
Net interest spread is calculated by
subtracting average rate on interest-bearing liabilities from
average yield on interest-earning assets.
(4)
Net interest margin is calculated by
dividing annualized net interest income by average interest-earning
assets.
(5)
Total funding is the sum of
interest-bearing liabilities and noninterest-bearing deposits. The
cost of total funding is calculated as annualized total interest
expense divided by average total funding.
Pacific City Financial Corporation and
Subsidiary
Average Balance, Average Yield, and
Average Rate (Continued)
($ in thousands)
Three Months Ended 6/30/2018
3/31/2018
Average Balance
Interest Income/
Expense
Avg. Yield/Rate
Average Balance
Interest Income/
Expense
Avg. Yield/Rate Assets Interest-earning
assets: Total loans (1) $ 1,228,015 $ 36,050 5.92 % $ 1,066,900 $
28,684 5.42 % U.S. government agency securities 23,778 278 2.36 %
23,733 275 2.34 % Mortgage-backed securities 66,591 769 2.33 %
50,476 466 1.86 % Collateralized mortgage obligation 51,719 589
2.30 % 26,834 259 1.95 % Municipal bonds (2) 6,567 81 2.49 % 8,785
96 2.20 % Other interest-earning assets 120,107
1,205 2.02 % 69,746 526 1.52 % Total
interest-earning assets 1,496,777 38,972 5.25
% 1,246,474 30,306 4.90 % Noninterest-earning
assets: Cash and cash equivalents 19,425 16,513 Allowance for loan
losses (12,406 ) (11,372 ) Other assets 27,105
27,145 Total noninterest-earning assets 34,124
32,286 Total assets $ 1,530,901 $ 1,278,760
Liabilities and Shareholders’ Equity Interest-bearing
liabilities: Deposits: NOW and money market accounts $ 288,680
1,533 1.07 % $ 322,963 $ 1,589 0.99 % Savings 8,686 12 0.28 % 8,762
12 0.28 % Time deposits 722,654 5,913 1.65 %
515,998 2,848 1.11 % Total interest-bearing
deposits 1,020,020 7,458 1.47 % 847,723 4,449 1.06 % Borrowings
from Federal Home Loan Bank 39,890 338 1.71 %
442 3 1.37 % Total interest-bearing
liabilities 1,059,910 7,796 1.48 %
848,165 4,452 1.06 % Noninterest-bearing liabilities
Noninterest-bearing demand 314,450 290,292 Other liabilities
8,962 8,267 Total noninterest-bearing
liabilities 323,412 298,559 Total
liabilities 1,383,322 1,146,724 Total shareholders' equity
147,579 132,036 Total liabilities and
shareholders’ equity $ 1,530,901 $ 1,278,760 Net
interest income $ 31,176 $ 25,854 Net interest spread (3) 3.77 %
3.84 % Net interest margin (4) 4.20 % 4.18 % Total deposits $
1,334,470 $ 7,458 1.13 % $ 1,138,015 $ 4,449 0.79 % Total funding
(5) $ 1,374,360 $ 7,796 1.14 % $ 1,138,457 $ 4,452 0.79 %
(1)
Total loans include both loans
held-for-sale and loans held-to-investment, net of deferred loan
costs (fees).
(2)
The yield on municipal bonds has not been
computed on a tax-equivalent basis.
(3)
Net interest spread is calculated by
subtracting average rate on interest-bearing liabilities from
average yield on interest-earning assets.
(4)
Net interest margin is calculated by
dividing annualized net interest income by average interest-earning
assets.
(5)
Total funding is the sum of
interest-bearing liabilities and noninterest-bearing deposits. The
cost of total funding is calculated as annualized total interest
expense divided by average total funding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180821005726/en/
Pacific City Financial CorporationTimothy Chang,
213-210-2000Executive Vice President & Chief Financial
Officer
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