SAN DIEGO, May 3, 2007 (PRIME NEWSWIRE) -- 1st Pacific Bancorp (OTCBB:FPBN), the holding company for 1st Pacific Bank of California, today announced first quarter 2007 net income of $672,000, a decrease of 3.0 percent from the $693,000 reported for the prior-year first quarter. Diluted earnings per share were $0.16, unchanged from the first quarter of 2006. Compared to fourth quarter of 2006, net income declined 14.7 percent, and 15.0 percent on a diluted per share basis. Year over year, results reflect solid loan growth, which has, however, slowed in the first quarter of this year, exceptional asset quality, and disciplined control of expenses, offset by net interest margin compression.
Highlights for the first quarter of 2007 include:
* Assets increased 13.7 percent to $315.6 million for the twelve-months ending March 31, 2007; loan growth was $32.6 million, up 13.2 percent. * The net interest margin declined 94 basis points over the past year, to 4.93 percent for the first quarter of 2007. * Asset quality remains exceptional. There were zero non-performing loans, zero foreclosed real estate, and zero net charge-offs reported for the first quarter of 2007. * Operating expenses, up 11.4 percent year over year, demonstrated the Company's disciplined approach to expense control. Non-interest expense has been steadily declining as a percent of average assets, improving by 29 basis points over the twelve-month period, to 3.47 percent of average assets annualized for the current quarter. * The holding company reorganization of 1st Pacific Bank of California was completed on January 16, 2007. Effective Tuesday, January 30, 2007, the common stock of 1st Pacific Bancorp began trading on the OTC Bulletin Board under the symbol FPBN. * On February 22, 2007, 1st Pacific entered into a definitive agreement to acquire Solana Beach, Calif.-based Landmark National Bank for $24.6 million in cash and stock. The acquisition will add $125.0 million in assets and two branches: one in Solana Beach and one in La Jolla.
Vincent Siciliano, President and CEO of 1st Pacific Bancorp, commented, "We are pleased with our performance in this challenging environment. Residential construction activity in San Diego County has slowed from its earlier heights; however, commercial real estate and industrial loans continue to support overall portfolio growth, albeit at a more moderate pace. Funding costs have been our limiting factor, but we have been successful recently in attracting lower-cost core deposits to replace wholesale funding. Our recent announcement of the Landmark acquisition is on track to close in the third quarter, and should provide additional expansion and cross-sell opportunities."
Total revenue, consisting of net interest income and non-interest income, was $3.91 million for the first quarter of 2007, an increase of 3.6 percent above the $3.77 million reported for the prior-year first quarter. Net interest income increased 2.3 percent to $3.74 million, reflecting a 21.8 percent increase in average earning assets, partially offset by a 94 basis point decline in net interest margin, to 4.93 percent. Compared with the fourth quarter of 2006, the first quarter margin declined 26 basis points, and according to Mr. Siciliano, "appears to be stabilizing." Non-interest income for the first quarter of 2007 was $170,000 compared with $120,000 for the year-ago quarter, an increase of 41.6 percent, with improvement from both services fees and gains on loan sales.
Expenses continue to be well controlled, declining relative to 1st Pacific's growing asset base. Noninterest expense was $2.7 million for the first quarter of 2007, an increase of $275,000 or 11.4 percent, over the prior-year first quarter. Salaries and benefits rose only $83,600, or 5.4 percent, benefiting from a stable headcount of 71 FTE employees year over year, despite the addition of five employees to staff the new office in El Cajon. Other expenses accounted for the largest share of the increase, up $130,700, or 24.5 percent from the first quarter of 2006; the formation of the holding company accounted for $50,000 of the increase in other expenses. Noninterest expense improved from 3.76 percent of average assets for the first quarter of 2006 to 3.47 percent for the current quarter as 1st Pacific continued to leverage its infrastructure. The efficiency ratio for the first quarter of 2007 was 69.0 percent compared with 64.1 percent for the year-ago quarter.
Asset quality remains exceptional. Nonperforming assets were zero at March 31, 2007, compared with $1.0 million of non-performing loans twelve months ago; the bank reported a net recovery of $100 this quarter, compared with a net charge-off of $632 for the year-ago quarter. At March 31, 2007, the loan loss reserve was $3.3 million, or 1.19 percent of loans.
At March 31, 2007, total assets were $315.6 million, an increase of 13.7 percent above year-ago levels; for the same 12-month period, loans grew $32.6 million or 13.2 percent, reaching $280.0 million at quarter-end. Construction and land loans (C&D) remained the largest component of the bank's loan portfolio; year over year, this category increased $9.7 million, or 9.6 percent, to $109.9 million. As a percent of the total loans, C&D loans accounted for 39.2 percent in the first quarter of 2007, down modestly from 40.5 percent in the year-ago quarter. "One of our strengths is portfolio diversification; commercial real estate and C&I loans account for 31 percent and 21 percent of our portfolio, respectively."
Mr. Siciliano added, "We are seeing a slowdown in residential construction activity this year in San Diego County; first quarter C&D loans are down $6.5 million from fourth quarter. However, our pipeline is still strong, and we do not anticipate any major shifts in our portfolio this year." Overall, loans increased by $4.8 million in the first quarter of 2007, up 1.7 percent, primarily from a higher level of commercial real estate lending.
Deposits were $268.8 million at March 31, 2007, up $33.2 million or 14.1 percent from twelve months ago. "During the fourth quarter, we ran a successful campaign that attracted over $14 million in money market funds, and this growth has continued into 2007, allowing us to reduce our reliance on wholesale time deposits," added Siciliano. Money market and savings accounts grew 55.1 percent over the past twelve months and now account for 33.6 percent of 1st Pacific's deposit base, up from 24.7 percent in the year-ago quarter. Meanwhile, time deposits declined from 47.5 percent of total deposits for the first quarter of 2006, to 43.4 percent for the current quarter.
At March 31, 2007, shareholders' equity was $26.7 million, an increase of $3.7 million, or 15.9 percent from twelve months ago. Shareholders' equity was 8.46 percent of assets at period-end compared with 8.30 percent the year earlier. Mr. Siciliano concluded, "We are positioned well in our highly diversified San Diego County market, with sufficient opportunities for growth despite a slowdown in the real estate sector. Our strong network of developers continues to present us with quality projects; there are just fewer available. We look forward to an enhanced market position with the acquisition of Landmark, and are excited by the emerging synergies between our two organizations."
About 1st Pacific Bancorp
1st Pacific Bancorp is the holding company for 1st Pacific Bank of California, San Diego's largest publicly owned community business bank. 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, the Tri-Cities area of Oceanside, Mission Valley, Inland North County, and El Cajon. 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 at www.1stpacificbank.com.
The 1st Pacific Bancorp logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=3261
Forward-Looking Statements
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 Bancorp with the Federal Reserve Board. 1st Pacific Bancorp undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
1st Pacific Bancorp CONSOLIDATED FINANCIAL HIGHLIGHTS (dollars in thousands except per share data) Quarterly ----------------------------------------------------- 2007 2006 2006 2006 2006 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr ----------------------------------------------------- EARNINGS Net interest income $ 3,737 3,809 3,874 3,908 3,652 Provision for loan losses $ 77 10 86 169 179 NonInterest income $ 170 134 140 145 120 NonInterest expense $ 2,694 2,635 2,441 2,477 2,419 Net income $ 672 789 873 822 693 Basic earnings per share $ 0.17 0.20 0.23 0.21 0.18 Diluted earnings per share $ 0.16 0.19 0.21 0.20 0.16 Average shares outstanding 3,890,484 3,873,532 3,868,396 3,866,992 3,852,399 Average diluted shares outstanding 4,228,740 4,215,993 4,181,556 4,136,256 4,238,811 PERFORMANCE RATIOS Return on average assets 0.87% 1.04% 1.23% 1.18% 1.08% Return on average common equity 10.36% 12.32% 14.21% 14.05% 12.41% Net interest margin (fully tax-equivalent) 4.93% 5.20% 5.61% 5.81% 5.87% Efficiency ratio 68.95% 66.83% 60.82% 61.13% 64.14% CAPITAL Period-ending equity to assets 8.46% 8.14% 8.46% 8.31% 8.30% Book value per share $ 6.86 6.67 6.42 6.17 5.96 ASSET QUALITY Net loan charge-offs (recoveries) $ (0) 1 0 0 1 Allowance for loan losses $ 3,328 3,251 3,242 3,156 2,987 Allowance for losses to total loans 1.19% 1.18% 1.27% 1.24% 1.21% Nonperforming loans $ 0 0 0 1,011 1,027 Other real estate owned $ 0 0 0 0 0 Nonperforming assets to total assets 0.00% 0.00% 0.00% 0.35% 0.37% END OF PERIOD BALANCES Total Loans $ 280,032 275,266 255,560 254,341 247,461 Total assets $ 315,559 318,465 293,530 287,352 277,449 Deposits $ 268,793 261,838 245,011 249,781 235,590 Shareholders' equity $ 26,705 25,936 24,841 23,875 23,037 Full-time equivalent employees 71 77 73 75 71 AVERAGE BALANCES Total Loans $ 277,367 266,602 254,315 246,028 234,133 Earning Assets $ 307,220 290,730 273,920 269,876 252,305 Total assets $ 314,849 299,530 282,106 278,573 260,654 Deposits $ 266,117 253,378 244,637 247,643 228,813 Shareholders' equity $ 26,321 25,389 24,358 23,456 22,634 1st Pacific Bancorp CONSOLIDATED BALANCE SHEETS Mar 31, 2007 Dec 31, 2006 Sept 30, 2006 ------------ ------------ ------------- ASSETS Cash and due from banks $ 5,515,000 $ 9,099,447 $ 6,949,190 Federal funds sold 17,375,000 20,985,000 18,180,000 ------------------------------------------ Total cash and cash equilvalents 22,890,000 30,084,447 25,129,190 Investment securities available for sale 8,780,059 8,998,338 9,365,311 FRB, FHLB and other equity stock, at cost 2,110,100 2,086,850 1,892,850 Construction & Land 109,903,840 116,389,134 97,495,583 Residential & Comm'l RE 87,033,528 81,130,349 81,999,650 SBA 7a & 504 Loans 19,619,738 19,883,247 21,141,858 Commercial Loans 58,478,979 52,796,722 50,557,980 Other Consumer 4,995,707 5,066,085 4,365,279 ------------------------------------------ Total loans and leases 280,031,792 275,265,537 255,560,350 Allowance for Loan Losses (3,328,102) (3,251,002) (3,242,372) ------------------------------------------ Total loans and leases, net 276,703,690 272,014,535 252,317,978 Premises and Equipment, net 1,493,318 1,604,318 1,674,390 Accrued Interest and Other Assets 3,582,064 3,676,110 3,150,008 ------------------------------------------ Total Assets $315,559,231 $318,464,598 $293,529,727 ========================================== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest-bearing demand $ 48,261,279 $ 46,099,641 $ 47,509,107 Interest bearing checking 13,605,014 13,323,197 12,097,749 Savings and Money Market 90,389,640 87,783,374 73,602,309 Time Deposits 116,536,936 114,632,266 111,802,138 ------------------------------------------ Total Deposits 268,792,869 261,838,478 245,011,303 Subordinated Debentures 5,000,000 5,000,000 5,000,000 Other borrowed money 14,000,000 24,010,000 17,500,000 Accrued interest and other liabilities 1,061,195 1,679,866 1,177,291 ------------------------------------------ Total liabilities 288,854,064 292,528,344 268,688,594 Shareholders' Equity: Common stock and additional paid-in capital 20,813,728 20,741,995 20,460,617 Retained Earnings 5,856,291 5,183,858 4,395,357 Cash Dividends Declared 0 0 0 Accumulated other comprehensive income(loss) 35,148 10,401 (14,841) ------------------------------------------ Total shareholders' equity 26,705,167 25,936,254 24,841,133 ------------------------------------------ Total liabilities and shareholders' equity $315,559,231 $318,464,598 $293,529,727 ========================================== June 30, 2006 Mar 31, 2006 ------------- ------------ ASSETS Cash and due from banks $ 7,493,644 $ 5,970,981 Federal funds sold 12,730,000 18,085,000 ---------------------------- Total cash and cash equilvalents 20,223,644 24,055,981 Investment securities available for sale 9,687,637 2,868,446 FRB, FHLB and other equity stock, at cost 1,727,850 1,716,400 Construction & Land 108,682,793 100,251,677 Residential & Comm'l RE 79,590,893 75,400,932 SBA 7a & 504 Loans 19,355,171 21,187,649 Commercial Loans 43,634,218 46,581,597 Other Consumer 3,077,554 4,039,508 ---------------------------- Total loans and leases 254,340,629 247,461,363 Allowance for Loan Losses (3,156,341) (2,987,251) ---------------------------- Total loans and leases, net 251,184,288 244,474,112 Premises and Equipment, net 1,693,611 1,731,355 Accrued Interest and Other Assets 2,834,575 2,602,967 ---------------------------- Total Assets $287,351,605 $277,449,261 ============================ LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest-bearing demand $ 51,318,114 $ 51,855,630 Interest bearing checking 18,699,984 13,504,710 Savings and Money Market 63,916,866 58,271,440 Time Deposits 115,846,467 111,958,210 ---------------------------- Total Deposits 249,781,431 235,589,990 Subordinated Debentures 5,000,000 5,000,000 Other borrowed money 7,000,000 13,000,000 Accrued interest and other liabilities 1,695,192 822,012 ---------------------------- Total liabilities 263,476,623 254,412,002 Shareholders' Equity: Common stock and additional paid-in capital 20,412,313 20,381,712 Retained Earnings 3,522,850 2,701,130 Cash Dividends Declared 0 0 Accumulated other comprehensive income (loss) (60,181) (45,583) ---------------------------- Total shareholders' equity 23,874,982 23,037,259 ---------------------------- Total liabilities and shareholders' equity $287,351,605 $277,449,261 ============================ 1st Pacific Bancorp CONSOLIDATED REPORTS OF INCOME Mar 31, Dec 31, Sept 30, June 30, Mar 31, 2007 2006 2006 2006 2006 ---------- ---------- ---------- ---------- ---------- INTEREST INCOME Loans, including fees $6,069,825 $6,031,359 $5,831,068 $5,532,555 $5,040,514 Investment securities 132,512 137,925 137,227 58,761 40,647 Federal funds sold 245,311 170,458 109,842 224,482 144,878 ---------------------------------------------------------- Total interest income 6,447,648 6,339,742 6,078,137 5,815,798 5,226,039 ---------------------------------------------------------- INTEREST EXPENSE Deposits 2,415,049 2,249,222 2,029,974 1,813,927 1,469,987 Subordinated debt and other borrowings 295,108 281,521 174,444 93,603 104,245 ---------------------------------------------------------- Total interest expense 2,710,157 2,530,743 2,204,418 1,907,530 1,574,232 ---------------------------------------------------------- Net Interest Income 3,737,491 3,808,999 3,873,719 3,908,268 3,651,807 Provision for Loan Losses 77,000 10,000 86,000 169,000 179,000 ---------------------------------------------------------- Net interest income after provision for loan losses 3,660,491 3,798,999 3,787,719 3,739,268 3,472,807 ---------------------------------------------------------- NON INTEREST INCOME Service charges, fees and other income 122,102 95,565 99,781 94,486 105,844 Brokered loan fees and gains on loan sales 47,790 38,492 40,200 50,284 13,786 ---------------------------------------------------------- Total non interest income 169,892 134,057 139,981 144,770 119,630 NON INTEREST EXPENSE Salaries and benefits 1,629,765 1,560,551 1,451,822 1,517,396 1,546,222 Occupancy and equipment 400,173 380,241 399,205 418,184 339,179 Other expense 664,328 694,210 590,266 541,882 533,603 ---------------------------------------------------------- Total non interest expense 2,694,266 2,635,002 2,441,293 2,477,462 2,419,004 ---------------------------------------------------------- Income before income tax expense 1,136,117 1,298,054 1,486,407 1,406,576 1,173,433 Income tax expense 463,684 509,553 613,900 584,855 480,645 ---------------------------------------------------------- Net Income $ 672,433 $ 788,501 $ 872,507 $ 821,721 $ 692,788 ========================================================== Basic earnings per share $ 0.17 $ 0.20 $ 0.23 $ 0.21 $ 0.18 Diluted earnings per share $ 0.16 $ 0.19 $ 0.21 $ 0.20 $ 0.16 Average shares out- standing 3,890,484 3,873,532 3,868,396 3,866,992 3,852,399 Average diluted shares out- standing 4,228,740 4,215,993 4,181,556 4,136,256 4,238,811