SAN DIEGO, July 18, 2006 (PRIMEZONE) -- 1st Pacific Bank of California (OTCBB:FPBS) today announced second quarter 2006 net income of $822,000, an increase of 65.1 percent above the $498,000 reported for the second quarter of 2005. Diluted earnings per share were $0.20 compared with $0.12 for the year-earlier quarter, up 66.7 percent. For the first six months of 2006, earnings were $1.5 million, or $0.36 per diluted share, an increase of 64.7 percent and 63.6 percent, respectively, above 2005 six-month earnings of $920,000, or $0.22 per diluted share.
Second quarter results reflect a continuation of strong loan and deposit growth, supported by margin expansion and good expense control. Highlights include:
-- Loan growth of $54.8 million or 27.5 percent year-over-year, driven by construction/development and commercial real estate lending. -- Expansion of the net interest margin to 5.81 percent for the second quarter of 2006, an increase of 44 basis points from the prior-year second quarter; by virtue of its highly asset-sensitive balance sheet, 1st Pacific has successfully passed along increased funding costs associated with a growing level of time deposits. -- 1st Pacific combines high growth with strong profitability, as evidenced by its second quarter ROA of 1.18 percent and ROE of 14.05 percent, compared with 0.87 percent and 9.76 percent, respectively, for the 2005 second quarter, -- Improved operating efficiencies as revenue growth continues to outpace operating expenses; the second quarter 2006 efficiency ratio improved 705 basis points year-over-year, to 61.1 percent. -- Asset quality continues to be extremely strong, with minimal losses since the bank's formation in 2000. -- The opening of a banking office in El Cajon, which will extend the bank's reach into the East County, providing access to a new business market.
A. Vincent Siciliano, President and CEO, commented, "Our San Diego market is one of the strongest in the country, with outstanding demographics and $46.4 billion in deposits. 1st Pacific Bank is competing successfully with banks many times its size based on the strong relationship culture we have developed and the unique value proposition we bring to every business customer."
Revenue growth continues to be exceptionally strong. Total revenue, consisting of net interest income and non-interest income, was $4.05 million for the second quarter of 2006, an increase of 33.5 percent over the $3.04 million reported in the prior-year second quarter. Net interest income grew 32.5 percent to $3.9 million, reflecting a 22.5 percent increase in average earning assets and a 44 basis point improvement in the net interest margin above the year-ago quarter, to 5.81 percent. Mr. Siciliano explained that 1st Pacific has successfully passed along increased funding costs by virtue of its highly asset-sensitive balance sheet. Non-interest income for the second quarter of 2006, largely service charges on accounts and income from loan sales, increased $59,000, or 68.1 percent year-over-year, to $145,000.
Expense levels continue to be well-controlled. Noninterest expense was $2.5 million for the current quarter, an increase of $407,000 or 19.7 percent above the June 2005 quarter. Expense increases were primarily related to corporate growth. Salaries and benefits expense rose $272,000 or 21.9 percent above year-earlier levels, reflecting an increase of ten FTE employees to 75. As a ratio to average assets, noninterest expense has been relatively stable year-over-year at 3.56 percent in the June 2006 quarter compared to 3.62 percent for the 2005 quarter.
Asset quality remains exceptionally strong. Mr. Siciliano commented, "We continue to experience virtually no losses, have no foreclosed property on our books, and maintain a steady level of nonperforming loans at approximately $1 million. Our success is the result of high quality lenders using good judgment to effectively manage risk." Nonperforming assets were $1.0 million, or 0.35 percent of assets, at June 30, 2006 compared with $1.0 million in the previous quarter, and $1.1 million for the year-ago quarter. As a percent of the portfolio, nonperforming loans continue to decline; for the June 2005 quarter, nonperforming assets amounted to 0.46 percent of assets. At June 30, 2006, the loan loss reserve was $3.2 million, or 1.24 percent of loans.
Assets reached $287.4 million, an increase of $54.0 million, or 23.1 percent, since June 30, 2005. Of this total, loans accounted for 100 percent of asset growth. Loans outstanding were $254.3 million at quarter-end; the portfolio is primarily commercial-related, with construction/land and commercial real estate accounting for 42.7 percent and 31.3 percent, respectively, of total loans.
Deposits were $249.8 million at June 30, 2006, up $42.9 million or 20.7 percent year-over-year. Time deposits increased $54.8 million from June 30, 2005, and now comprise 46.4 percent of total deposits, up from 27.7 percent a year ago. Mr. Siciliano explained that much of the CD portfolio is of short duration so that management retains flexibility as interest rates change.
At June 30, 2006, shareholders' equity was $23.9 million, an increase of $3.1 million, or 15.0 percent from the year-ago quarter. Equity was 8.31 percent of assets at June 30, 2006 compared with 8.90 percent for the prior-year quarter-end. Shares outstanding at the end of the current quarter were 3,867,160. Mr. Siciliano concluded, "We've completed another excellent quarter, thanks to the dedication of our outstanding staff, the loyalty of our customers, and the support of our shareholders. We are building an exceptional bank, and we are focused on achieving results that meet the expectations of all three of these important stakeholders."
About 1st Pacific Bank of California
1st Pacific Bank is a San Diego-based, locally owned and locally operated financial institution. The bank offers a full complement of business products and services to meet the financial needs of professional firms, small to mid-sized businesses, their owners and the people who work there. Offices are located in the Golden Triangle area of La Jolla, in the Tri-Cities area of Oceanside, in Mission Valley, in Inland North County, and at its newest office in El Cajon. The bank also operates a loan production office serving the Inland Empire in Murrieta. The bank opened Nov. 17, 2000 after raising $11.5 million in an initial public offering. For additional information, visit the Company's web site: www.1stpacbank.com.
Safe Harbor
This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulation; changes in tax laws; changes in prices, levies and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in the national and local economy; and other factors, including risk factors, referred to from time to time in filings made by 1st Pacific Bank with the Securities and Exchange Commission. 1st Pacific Bank undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
1ST PACIFIC BANK OF CALIFORNIA CONSOLIDATED FINANCIAL HIGHLIGHTS Quarterly ----------------------------------------------------- 2006 2006 2005 2005 2005 (dollars in 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr thousands --------- --------- --------- --------- --------- except per share data) EARNINGS Net interest income $ 3,908 3,652 3,538 3,307 2,950 Provision for loan losses $ 169 179 70 170 125 NonInterest income $ 145 120 186 117 86 NonInterest expense $ 2,477 2,419 2,423 2,061 2,070 Net income $ 822 693 725 705 498 Basic earnings per share $ 0.21 0.18 0.19 0.18 0.13 Diluted earnings per share $ 0.20 0.16 0.17 0.17 0.12 Average shares out- standing(a) 3,866,992 3,852,399 3,849,540 3,849,289 3,842,046 Average diluted shares out- standing(a) 4,136,256 4,238,811 4,227,819 4,207,607 4,168,485 PERFORMANCE RATIOS Return on average assets 1.18% 1.08% 1.13% 1.18% 0.87% Return on average common equity 14.05% 12.41% 13.17% 13.25% 9.76% Net interest margin (fully tax- equivalent) 5.81% 5.87% 5.71% 5.71% 5.37% Efficiency ratio 61.13% 64.14% 65.07% 60.20% 68.18% CAPITAL Period-ending equity to assets 8.31% 8.30% 8.37% 8.41% 8.90% Book value per share $ 6.17 5.96 5.77 5.58 5.39 ASSET QUALITY Net loan charge-offs (recoveries) $ 0 1 (3) 11 0 Allowance for loan losses $ 3,156 2,987 2,809 2,736 2,577 Allowance for losses to total loans 1.24% 1.21% 1.22% 1.20% 1.29% Nonperforming loans $ 1,011 1,027 1,052 1,167 1,079 Other real estate owned $ 0 0 0 0 0 Nonperforming assets to total assets 0.35% 0.37% 0.40% 0.46% 0.46% END OF PERIOD BALANCES Total Loans $254,341 247,461 230,382 227,860 199,494 Total assets $287,352 277,449 265,582 255,242 233,389 Deposits $249,781 235,590 237,208 210,457 206,889 Shareholders' equity $ 23,875 23,037 22,230 21,466 20,762 Full-time equivalent employees 75 71 69 62 65 AVERAGE BALANCES Total Loans $246,028 234,133 226,672 214,618 191,148 Total assets $278,573 260,654 253,998 237,840 228,849 Deposits $247,643 228,813 222,452 207,197 202,213 Shareholders' equity $ 23,456 22,634 21,848 21,114 20,451 (a) Adjusted for 2 for 1 stock split effective June 30, 2005 6 Months Year-To-Date --------------------- 2006 2005 EARNINGS ------- ------- Net interest income 7,560 5,724 Provision for loan losses 348 313 Non Interest income 264 188 Non Interest expense 4,896 4,047 Net income 1,515 920 Basic earnings per share 0.39 0.24 Diluted earnings per share 0.36 0.22 Average shares outstanding(a) 3,859,695 3,831,777 Average diluted shares outstanding(a) 4,187,534 4,149,861 PERFORMANCE RATIOS Return on average assets 1.13% 0.84% Return on average common equity 13.25% 9.19% Net interest margin (fully tax-equivalent) 5.84% 5.40% Efficiency ratio 62.58% 68.45% CAPITAL Period-ending equity to assets 8.31% 8.90% Book value per share 6.17 5.39 ASSET QUALITY Net loan charge-offs (recoveries) 1 0 Allowance for loan losses 3,156 2,577 Allowance for losses to total loans 1.24% 1.29% Nonperforming loans 1,011 1,079 Other real estate owned 0 0 Nonperforming assets to total assets 0.35% 0.46% END OF PERIOD BALANCES Total Loans 254,341 199,494 Total assets 287,352 233,389 Deposits 249,781 206,889 Shareholders' equity 23,875 20,762 Full-time equivalent employees 74 65 AVERAGE BALANCES Total Loans 240,113 190,745 Total assets 269,663 221,310 Deposits 238,280 195,720 Shareholders' equity 23,045 20,185 (a) Adjusted for 2 for 1 stock split effective June 30, 2005 1st Pacific Bank of California CONSOLIDATED REPORTS OF INCOME THREE MONTHS ENDED SIX MONTHS ENDED June 30, June 30, 2006 2005 2006 2005 ----------- ----------- ----------- ----------- INTEREST INCOME Loans and leases, including fees $ 5,532,555 $ 3,602,176 $10,573,069 $ 6,983,681 Investment securities 58,761 65,085 99,408 127,758 Federal funds sold 224,482 162,858 369,360 225,080 ----------- ----------- ----------- ----------- Total interest income 5,815,798 3,830,119 11,041,837 7,336,519 ----------- ----------- ----------- ----------- INTEREST EXPENSE Deposits 1,813,927 817,941 3,283,914 1,527,308 Subordinated debt and other borrowings 93,603 62,575 197,848 85,027 ----------- ----------- ----------- ----------- Total interest expense 1,907,530 880,516 3,481,762 1,612,335 ----------- ----------- ----------- ----------- Net interest income 3,908,268 2,949,603 7,560,075 5,724,184 Provision for loan losses 169,000 125,000 348,000 312,500 ----------- ----------- ----------- ----------- Net interest income after provision for loan losses 3,739,268 2,824,603 7,212,075 5,411,684 NON INTEREST INCOME Service charges, fees and other income 94,487 79,733 200,330 153,264 Brokered loan fees and gains on loan sales 50,283 6,390 64,070 35,072 ----------- ----------- ----------- ----------- Total non interest income 144,770 86,123 264,400 188,336 NON INTEREST EXPENSE Salaries and benefits 1,516,795 1,244,732 3,063,618 2,463,782 Occupancy and equipment 399,952 329,397 757,363 655,387 Other expense 560,715 495,733 1,075,485 927,916 ----------- ----------- ----------- ----------- Total non interest expense 2,477,462 2,069,862 4,896,466 4,047,085 ----------- ----------- ----------- ----------- Income before income tax expense 1,406,576 840,864 2,580,009 1,552,935 Income tax expense 584,855 343,100 1,065,500 633,000 ----------- ----------- ----------- ----------- Net income $ 821,721 $ 497,764 $ 1,514,509 $ 919,935 ----------- ----------- ----------- ----------- Basic earnings per share $0.21 $0.13 $0.39 $0.24 Diluted earnings per share $0.20 $0.12 $0.36 $0.22 Average shares outstanding(a) 3,866,992 3,842,046 3,859,695 3,831,777 Average diluted shares outstanding(a) 4,136,256 4,168,485 4,187,534 4,149,861 (a) - Adjusted for 2 for 1 stock split effective June 30, 2005 1ST PACIFIC BANK OF CALIFORNIA CONSOLIDATED BALANCE SHEETS JUNE 30, DECEMBER 31, JUNE 30, 2006 2005 2005 ---- ---- ---- ASSETS Cash and due from banks $ 7,493,644 $ 5,228,147 $ 6,408,614 Federal funds sold 12,730,000 23,710,000 19,635,000 ------------ ------------ ------------ Total cash and cash equivalents 20,223,644 28,938,147 26,043,614 Investment securities available for sale 9,687,637 3,145,621 5,133,495 FRB, FHLB and other equity stock, at cost 1,727,850 1,615,500 1,415,850 Construction & Land 108,682,793 94,912,271 74,142,784 Residential & Comm'l RE 79,590,893 65,122,928 50,291,548 SBA 7a & 504 Loans 19,355,171 21,964,919 21,257,557 Commercial Loans 43,634,218 43,970,126 46,571,660 Other Consumer 3,077,554 4,411,829 7,230,226 ------------ ------------ ------------ Total loans and leases 254,340,629 230,382,073 199,493,775 Allowance for loan losses (3,156,341) (2,808,883) (2,577,496) ------------ ------------ ------------ Total loans and leases, net 251,184,288 227,573,190 196,916,279 Premises and equipment, net 1,693,611 1,592,224 1,638,938 Accrued interest and other assets 2,834,575 2,716,912 2,241,250 ------------ ------------ ------------ Total assets $287,351,605 $265,581,594 $233,389,426 ------------ ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest-bearing demand $ 51,318,114 $ 54,772,554 $ 57,978,666 Interest-bearing checking 18,699,984 14,539,658 10,732,953 Savings and Money Market 63,916,866 76,319,842 80,782,688 Time Deposits 115,846,467 91,576,358 57,394,641 ------------ ------------ ------------ Total deposits 249,781,431 237,208,412 206,888,948 Subordinated debentures 5,000,000 5,000,000 5,000,000 Other borrowed money 7,000,000 0 0 Accrued interest and other liabilities 1,695,192 1,142,820 738,621 ------------ ------------ ------------ Total liabilities 263,476,623 243,351,232 212,627,569 SHAREHOLDERS' EQUITY Common stock and additional paid-in capital 20,412,313 20,261,472 20,212,822 Retained earnings 3,522,850 2,008,341 578,142 Accumulated other comprehensive income (loss) (60,181) (39,451) (29,107) ------------ ------------ ------------ Total shareholders' equity 23,874,982 22,230,362 20,761,857 Total liabilities and shareholders' equity $287,351,605 $265,581,594 $233,389,426 ------------ 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