SAN DIEGO, Feb. 6, 2008 (PRIME NEWSWIRE) -- 1st Pacific Bancorp (Nasdaq:FPBN), the holding company for 1st Pacific Bank of California, today reported profits in 2007 that reflect its acquisition of Landmark National Bank and the costs associated with establishing a broader operational platform to support future growth. Net income totaled $2.5 million, or $0.52 per diluted share, in 2007 compared with $3.2 million, or $0.76 per diluted share, in 2006. Fourth-quarter 2007 net income totaled $443,100, or $0.09 per share, compared with $788,500, or $0.19 per share in the fourth quarter a year ago. In connection with the July 2007 acquisition of Landmark, 1st Pacific issued 1 million shares resulting in a 23% increase in the number of average diluted shares outstanding compared to fourth quarter 2006.
"We accomplished a great deal in 2007 to expand our franchise and establish a first-class operational platform," stated Vincent Siciliano, president and chief executive. "While the short-term costs of the acquisition impacted earnings in the second half of the year, we remain confident that the Landmark acquisition will begin to contribute to profitability in 2008 and the operational improvements accomplished in 2007 will support growth over the next several years. In addition to the integration of Landmark's operations into 1st Pacific's, in 2007 we completed the bank-holding company's reorganization, relocated two banking offices, centralized our administrative and support departments into one headquarters location, completed a systems conversion, introduced new banking products, welcomed new board members and listed our stock on NASDAQ Global Market.
"Our management team is mindful of the challenges facing the banking industry in 2008. We anticipate that loan and deposit growth will likely be at a slower rate than growth posted in previous years. With the recent acquisition of Landmark, 1st Pacific Bancorp is better positioned to capture the ongoing growth opportunities in San Diego county -- one of the most vibrant and diversified markets in the country. In the first quarter of 2008, we are on track to open a limited service banking facility in downtown San Diego. 1st Pacific's goal is to be the leading commercial community bank to small and mid-sized businesses in our region," added Siciliano.
Fourth-Quarter 2007 Financial Highlights
* Total revenue rose 24%. * Net interest income before the provision for loan losses climbed 23%. Average earning assets were up 36%. * Net interest margin of 4.71% contracted 32 basis points from the third quarter of 2007. Loans structured to include rate floors helped mitigate a cumulative 100 basis point change in the federal funds rate from September 2007 through December 2007. * Assets rose 30% to $414.7 million over the past twelve months. * Loans rose 27% to $349.8 million. * Total deposits climbed 32% to $345.4 million. * The ratio of nonperforming assets as a percent of total assets declined to 1.34% from 1.50% in the third quarter of 2007. On a sequential quarter basis, nonperforming assets were reduced to $5.6 million from $6.3 million.
Review of Operations
Total revenue, consisting of net interest income and non-interest income, increased 24% year over year to $4.9 million for the fourth quarter. For the year ended December 31, 2007, revenue rose 14% to $18.0 million from $15.8 million for the year ended December 31, 2006.
Net interest income before the provision for loan losses increased 23% to $4.7 million compared with $3.8 million in the fourth quarter a year ago. During the quarter, average earnings assets rose 36% year over year, primarily as a result of the Landmark acquisition. On an annual basis, 2007 net interest income rose 13% to $17.2 million compared to $15.2 million. Average earning assets were up 30%.
The increase in fourth quarter net interest income came despite a 49 basis point year-over-year decline in the net interest margin to 4.71%. 1st Pacific's net interest margin in the fourth quarter a year ago was 5.20% and 5.03% in the third quarter of 2007. The full-year net interest margin was 4.87% in 2007 compared with 5.61% in 2006.
The change in net interest margin for both the quarter and the year reflects a cumulative 100 basis point cut in the federal funds rate. "1st Pacific is able to mitigate changes in short-term interest rates on its net interest margin because many of its loans are structured to include rate floors. Nonetheless, it is difficult to immunize ourselves totally from the cumulative impact of a 100 basis point change in rates in a three-month period. Given the recent cuts in the federal funds rate to 3.00% on January 22, 2008 and January 30, 2008, 1st Pacific proactively re-priced its deposits to partially offset compression of its yield on earning assets," stated Jim Burgess, chief financial officer.
In the fourth quarter, 1st Pacific recognized a provision for loan loss of $150,000 compared with $10,000 in the year-ago period and $37,000 in the immediate prior quarter.
Non-interest income for the fourth quarter increased 38% to $185,600 from $134,100 for the year-ago quarter. For the full-year 2007, non-interest income was $709,500 versus $538,400, a gain of 32%, from 2006. The increase primarily reflects higher service charges and account fees.
Non-interest expense or operating expense reflects the acquisition of Landmark and associated merger and integration costs. For the year, non-interest expense grew 34% to $13.4 million from $10.0 million. In the fourth quarter, non-interest expense increased 51% to $4.0 compared with $2.6 million in the same quarter a year ago.
Non-interest expense was 1% below the level reported in the third quarter of 2007. In the fourth quarter, 1st Pacific made progress eliminating temporarily elevated expenses associated with the merger and integration of Landmark. Expense for salaries and benefits as well as occupancy and equipment fell 5% from the third quarter of 2007. Other expense rose by 12% from the third quarter of 2007.
* Salaries and benefits were $2.1 million for the fourth quarter, down $117,700, or 5%, from the third quarter. 1st Pacific was able to reduce temporary staffing needed to help with the integration of the Landmark acquisition. On a year-over-year basis, salaries and benefits rose 32% and reflect the addition of 30 FTEs (full-time equivalents), or a head-count increase of 39%, associated with the Landmark acquisition. A number of new positions were also added as a result of the bank's growth. For the year, expense for salaries and benefits was $7.5 million compared with $6.1 million in 2006. * Occupancy and equipment expense totaled $747,700 for the quarter and was down $40,300, or 5%, from the preceding quarter. From year- ago levels, occupancy and equipment rose from $380,200. Annual occupancy and equipment expense totaled $2.3 million, up from $1.5 million one year ago. * Other expense increased $128,600 from the third quarter of 2007 to $1.2 million. Roughly one third of the incrementally higher expense was related to various legal costs. Other costs relate to extraordinary printing expenses associated with the merger and a non-recoverable robbery loss. Non-recurring expenses in the fourth quarter totaled $154,000. For the year ended December 31, 2007, other operating expense rose to $3.6 million from $2.4 million for the year ended December 31, 2006.
Balance Sheet Performance
Total assets increased 30% to $414.6 million at December 31, 2007, representing a $96.2 million gain from year-ago levels of $318.5 million. The increase primarily reflects the addition of assets from the Landmark National Bank acquisition.
Total loans rose 27% to $349.8 million at year-end 2007 from $275.3 million at the end of 2006. Sequentially, loans were equal to levels reported during the third quarter of 2007; however, the mix of loans changed. 1st Pacific Bank grew commercial loans and reduced its exposure to construction & land (C&L). Specifically, commercial loans were 22% of total loans compared with 20% in the third quarter of 2007 and C&L fell to 36% from 38%. Residential and commercial real estate was 34% down from 35% last quarter; both small business administration and consumer loans remained unchanged at 5% and 3%, respectively. "1st Pacific is actively managing its loan portfolio to reduce its aggregate exposure to areas such as construction and land development. 1st Pacific does not engage in residential mortgage lending, and consequently, has no sub-prime mortgages in its portfolio," Siciliano added.
Nonperforming assets totaled $5.6 million, or 1.34% of total assets at December 31, 2007. Compared with the immediate preceding quarter, nonperforming assets, which represented 1.50% of total assets, were reduced by $782,000. "We anticipate that the level of nonperforming assets will be manageable going forward primarily due to our strong underwriting. In the first quarter of 2008, as in the fourth quarter of 2007, we expect certain nonperforming loans to pay off or be reduced, but other nonperforming loans are likely to be identified given the current environment," commented Jim Burgess.
1st Pacific added $150,000 its loan loss provision for the fourth quarter ended December 31, 2007. After net loan charge-offs of $98,000, 1st Pacific's allowance for total loan losses was $4.5 million, or 1.29% of total loans, compared with $3.3 million, or 1.18%, in the fourth quarter of 2006. The allowance for loans losses in the third quarter of 2007 was $4.5 million or 1.28% of total loans.
Deposits were up 32% to $345.3 million at year-end 2007 reflecting an $83.5 million increase from twelve months ago, primarily reflecting the deposits added through the Landmark acquisition.
Shareholders' equity rose 73% year over year. At December 31, 2007, shareholders' equity was $45.0 million versus $25.9 million at the end of 2006. The $19.0 million gain in equity reflects the shares issued in the July 2007 acquisition of Landmark National Bank. In connection with the acquisition, 1st Pacific paid $8.6 million in cash and issued 1.0 million shares of common, resulting in $15.9 million of additional equity. The acquisition added $12.1 million to goodwill and other intangibles. Tangible book value per share totaled $6.68 at December 31, 2007, versus $6.67 a year ago.
About 1st Pacific Bancorp
1st Pacific Bancorp is the holding company for 1st Pacific Bank of California, San Diego's leading local 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. Including its recent acquisition of Landmark National Bank, 1st Pacific Bank has a total of eight banking offices located in San Diego County: one each in the University Towne Center area, the Tri-Cities area of Oceanside, Mission Valley, the Inland North County, El Cajon, La Jolla Village, Solana Beach and Downtown San Diego. For additional information, visit the company's website at www.1stpacbank.com.
Safe Harbor Statement. 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 BALANCE SHEETS
(unaudited) Annual
Dec 31, 2007 Sept 30, 2007 Dec 31, 2006 % Change
------------ ------------ ------------
ASSETS
Cash and due
from banks $ 6,397,189 $ 8,050,507 $ 9,099,447 -30%
Federal funds sold 11,160,000 22,390,000 20,985,000 -47%
----------------------------------------
Total cash and
cash equilvalents 17,557,189 30,440,507 30,084,447 -42%
Investment securities
available for sale 23,901,429 17,604,764 8,998,338 166%
FRB, FHLB and other
equity stock, at cost 3,184,200 3,439,750 2,086,850 53%
Construction & land 125,661,143 132,666,956 116,389,134 8%
Residential &
commercial RE 120,530,541 121,601,613 81,130,349 49%
SBA 7a & 504 loans 15,880,428 16,727,294 19,883,247 -20%
Commercial loans 77,581,769 70,201,589 52,796,722 47%
Other consumer 10,164,841 8,930,280 5,066,085 101%
----------------------------------------
Total loans and
leases 349,818,722 350,127,732 275,265,537 27%
Allowance for
loan losses (4,516,625) (4,464,714) (3,251,002)
----------------------------------------
Total loans
and leases, net 345,302,097 345,663,018 272,014,535 27%
Premises and
equipment, net 4,094,785 3,847,837 1,604,318 155%
Goodwill and other
intangible assets 11,932,086 12,090,626 0
Accrued interest
and other assets 8,675,539 8,097,004 3,676,110 136%
----------------------------------------
Total assets $414,647,325 $421,183,506 $318,464,598 30%
========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing
demand $ 73,366,761 $ 78,140,129 $ 46,099,641 59%
Interest bearing
checking 16,344,597 17,376,099 13,323,197 23%
Savings and
money market 98,639,209 100,729,028 87,783,374 12%
Time deposits 157,011,040 155,912,934 114,632,266 37%
----------------------------------------
Total deposits 345,361,607 352,158,190 261,838,478 32%
Subordinated
debentures 10,155,000 10,155,000 5,000,000 103%
Other borrowed money 10,000,000 10,000,000 24,010,000 -58%
Accrued interest
and other liabilities 4,156,771 4,568,134 1,679,866 147%
----------------------------------------
Total liabilities 369,673,378 376,881,324 292,528,344 26%
Shareholders' equity:
Common stock and
additional paid-in
capital 37,378,697 37,019,375 20,741,995 80%
Retained earnings 7,649,040 7,205,963 5,183,858 48%
Accumulated other
comprehensive
income (loss) (53,790) 76,844 10,401
----------------------------------------
Total shareholders'
equity 44,973,947 44,302,182 25,936,254 73%
----------------------------------------
Total liabilities
and shareholders'
equity $414,647,325 $421,183,506 $318,464,598 30%
========================================
1st Pacific Bancorp
CONSOLIDATED REPORTS OF INCOME
(unaudited)
QUARTER ENDED DECEMBER 31:
------------------------------
2007 2006 % Chg
---- ---- -----
INTEREST INCOME
Loans, including fees $ 7,273,105 $ 6,031,359 21%
Investment securities 388,761 137,925 182%
Federal funds sold 248,758 170,458 46%
----------- -----------
Total interest income 7,910,624 6,339,742 25%
----------- -----------
INTEREST EXPENSE
Deposits 2,909,219 2,249,222 29%
Subordinated debt and other
borrowings 297,920 281,521 6%
----------- -----------
Total interest expense 3,207,139 2,530,743 27%
----------- -----------
Net interest income 4,703,485 3,808,999 23%
Provision for loan losses 150,000 10,000 1400%
----------- -----------
Net interest income after provision
for loan losses 4,553,485 3,798,999 20%
NON-INTEREST INCOME
Service charges, fees and other
income 185,624 95,565 94%
Brokered loan fees and gains
on loan sales 0 38,492 -100%
----------- -----------
Total non-interest income 185,624 134,057 38%
NON-INTEREST EXPENSE
Salaries and benefits 2,063,900 1,560,551 32%
Occupancy and equipment 747,683 380,241 97%
Other expense 1,158,180 694,210 67%
----------- -----------
Total non-interest expense 3,969,763 2,635,002 51%
----------- -----------
Income before income tax expense 769,346 1,298,054 -41%
Income tax expense 326,269 509,553 -36%
----------- -----------
NET INCOME $ 443,077 $ 788,501 -44%
=========== ===========
Basic earnings per share $ 0.09 $ 0.20 -56%
Diluted earnings per share $ 0.09 $ 0.19 -54%
Average shares outstanding 4,920,795 3,873,532 27%
Average diluted shares outstanding 5,186,741 4,215,993 23%
(unaudited)
YEAR ENDED DECEMBER 31:
------------------------------
2007 2006 % Chg
---- ---- -----
INTEREST INCOME
Loans, including fees $27,241,609 $22,435,496 21%
Investment securities 984,163 374,560 163%
Federal funds sold 975,655 649,660 50%
----------- -----------
Total interest income 29,201,427 23,459,716 24%
----------- -----------
INTEREST EXPENSE
Deposits 10,747,435 7,563,110 42%
Subordinated debt and other
borrowings 1,212,927 653,813 86%
----------- -----------
Total interest expense 11,960,362 8,216,923 46%
----------- -----------
Net interest income 17,241,065 15,242,793 13%
Provision for loan losses 338,000 444,000 -24%
----------- -----------
Net interest income after provision
for loan losses 16,903,065 14,798,793 14%
NON-INTEREST INCOME
Service charges, fees and other income 581,255 395,676 47%
Brokered loan fees and gains on loan
sales 128,283 142,762 -10%
----------- -----------
Total non-interest income 709,538 538,438 32%
NON-INTEREST EXPENSE
Salaries and benefits 7,459,716 6,075,991 23%
Occupancy and equipment 2,337,517 1,536,809 52%
Other expense 3,604,388 2,359,961 53%
----------- -----------
Total non-interest expense 13,401,621 9,972,761 34%
----------- -----------
Income before income tax expense 4,210,982 5,364,470 -22%
Income tax expense 1,745,801 2,188,953 -20%
----------- -----------
NET INCOME $ 2,465,181 $ 3,175,517 -22%
=========== ===========
Basic earnings per share $ 0.56 $ 0.82 -32%
Diluted earnings per share $ 0.52 $ 0.76 -31%
Average shares outstanding 4,405,191 3,865,330 14%
Average diluted shares outstanding 4,715,218 4,193,154 12%
1st Pacific Bancorp
CONSOLIDATED FINANCIAL HIGHLIGHTS
Quarterly
(uaudited) ---------------------------------------
(dollars in thousands except 2007 2007 2006 Annual
per share data) 4th Qtr 3rd Qtr 4th Qtr % Chg
---------------------------------------
EARNINGS
Net interest income $ 4,703 $ 5,032 $ 3,809 23%
Provision for loan losses $ 150 $ 37 $ 10
Non-interest income $ 186 $ 178 $ 134 38%
Non-interest expense $ 3,970 $ 3,999 $ 2,635 51%
Net income $ 443 $ 685 $ 789 -44%
Basic earnings per share $ 0.09 $ 0.14 $ 0.20 -56%
Diluted earnings per share $ 0.09 $ 0.13 $ 0.19 -54%
Average shares outstanding 4,920,795 4,910,354 3,873,532 27%
Average diluted shares
outstanding 5,186,741 5,212,129 4,215,993 23%
PERFORMANCE RATIOS
Return on average assets 0.42% 0.66% 1.04%
Return on average
common equity 3.91% 6.20% 12.32%
Net interest margin
(fully tax-equivalent) 4.71% 5.03% 5.20%
Efficiency ratio 81.20% 76.76% 66.83%
CAPITAL
Tangible equity to assets 8.20% 7.87% 8.14%
Tangible book value per
share $ 6.68 $ 6.55 $ 6.67 0%
ASSET QUALITY
Net loan charge-offs
(recoveries) $ 98 $ (0)$ 1
Allowance for loan losses $ 4,517 $ 4,465 $ 3,251 39%
Allowance for losses
to total loans 1.29% 1.28% 1.18%
Nonperforming loans $ 5,554 $ 6,336 $ --
Other real estate owned $ -- $ -- $ --
Nonperforming assets
to total assets 1.34% 1.50% 0.00%
END OF PERIOD BALANCES
Total loans $ 349,819 $ 350,128 $ 275,266 27%
Total assets $ 414,647 $ 421,184 $ 318,465 30%
Deposits $ 345,362 $ 352,158 $ 261,838 32%
Shareholders' equity $ 44,974 $ 44,302 $ 25,936 73%
Full-time equivalent
employees 107 101 77 39%
AVERAGE BALANCES
Total loans $ 345,918 $ 352,384 $ 266,602 30%
Earning assets $ 396,221 $ 397,059 $ 290,730 36%
Total assets $ 423,198 $ 412,800 $ 299,530 41%
Deposits $ 352,717 $ 354,492 $ 253,378 39%
Shareholders' equity $ 44,905 $ 43,840 $ 25,389 77%
12 Months Year-To-Date
(uaudited) ---------------------------------
(dollars in thousands except Annual
per share data) 2007 2006 % Chg
---------------------------------
EARNINGS
Net interest income $ 17,241 $ 15,243 13%
Provision for loan losses $ 338 $ 444 -24%
Non-interest income $ 710 $ 538 32%
Non-interest expense $ 13,402 $ 9,973 34%
Net income $ 2,465 $ 3,176 -22%
Basic earnings per share $ 0.56 $ 0.82 -32%
Diluted earnings per share $ 0.52 $ 0.76 -31%
Average shares outstanding 4,405,191 3,865,330 14%
Average diluted shares
outstanding 4,715,218 4,193,154 12%
PERFORMANCE RATIOS
Return on average assets 0.67% 1.13%
Return on average common equity 6.96% 13.25%
Net interest margin
(fully tax-equivalent) 4.87% 5.61%
Efficiency ratio 74.66% 63.19%
CAPITAL
Tangible equity to assets 8.20% 8.14%
Tangible book value per share $ 6.68 $ 6.67 0%
ASSET QUALITY
Net loan charge-offs (recoveries) $ 98 $ 2
Allowance for loan losses $ 4,517 $ 3,251 39%
Allowance for losses to total
loans 1.29% 1.18%
Nonperforming loans $ 5,554 $ --
Other real estate owned $ -- $ --
Nonperforming assets to total
assets 1.34% 0.00%
END OF PERIOD BALANCES
Total loans $ 349,819 $ 275,266 27%
Total assets $ 414,647 $ 318,465 30%
Deposits $ 345,362 $ 261,838 32%
Shareholders' equity $ 44,974 $ 25,936 73%
Full-time equivalent employees 107 77 39%
AVERAGE BALANCES
Total loans $ 315,410 $ 250,369 26%
Earning assets $ 354,009 $ 271,819 30%
Total assets $ 370,514 $ 280,328 32%
Deposits $ 310,654 $ 243,688 27%
Shareholders' equity $ 35,431 $ 23,959 48%