SAN DIEGO, April 21, 2008 (PRIME NEWSWIRE) -- 1st Pacific Bancorp (Nasdaq:FPBN), the holding company for 1st Pacific Bank of California, today reported strong loan and deposit growth, primarily through its acquisition of Landmark National Bank last year which contributed to first quarter profits. The Company recorded first quarter net income of $447,200, or $0.09 per diluted share, compared with $672,400, or $0.16 per diluted share, in the first quarter a year ago despite the challenging economic environment, slumping housing market and continued compression on interest margins. In connection with the July 2007 acquisition of Landmark, 1st Pacific issued 1 million shares resulting in a 21% increase in the number of average diluted shares outstanding compared to first quarter 2007.
"We began this year with a solid first quarter performance considering the economic climate," stated Vincent Siciliano, president and chief executive. "Year over year comparisons reflect our 2007 Landmark acquisition which has contributed to the bank's growth and our first quarter profitability. More importantly, our seasoned deposit and loan portfolios, capital base and reserves will enable us to weather the current decline in short-term interest rates and changes in the economy. We will continue our focus on growing our franchise by building high-quality relationships with our customers."
"San Diego County continues to be an attractive business environment with a large employment base, a diverse economy, well established infrastructure and a dynamic market. The economic viability of the county is a great fit for our focus on commercial and industrial lending. During the first quarter we opened a banking facility in downtown San Diego, which is an important market for us in terms of being recognized as a San Diego headquartered bank and the business opportunities there. This gives us a branch network to facilitate our ongoing strategy of building the leading community business bank in our region," Siciliano added.
First Quarter 2008 Financial Highlights
* Total revenue increased 19%. * Net interest income before the provision for loan losses rose 18%. Average earning assets were up 25%. * Net interest margin was 4.60%, contracting 11 basis points from the fourth quarter of 2007 and 33 basis points from the first quarter of 2007. * Loans structured to include rate floors helped mitigate a cumulative 200 basis point change in the federal funds rate from January through March 2008. * Loans increased 22% to $342 million. * Total deposits climbed 20% to $323 million. * Assets rose 34% to $422 million over the past twelve months. * The ratio of nonperforming assets as a percent of total assets declined to 1.01% from 1.34% in the fourth quarter of 2007. On a sequential quarter basis, nonperforming loans were reduced to $4.3 million from $5.6 million.
Review of Operations
Total revenue, consisting of net interest income and non-interest income, increased 19% to $4.7 million for the first quarter of 2008, compared to $3.9 million in the first quarter a year ago.
Net interest income before the provision for loan losses increased 18% to $4.4 million in the first quarter compared with $3.7 million in the first quarter a year ago. Average earnings assets increased 25% year over year, primarily as a result of the Landmark acquisition.
"We have been able to mitigate changes in short-term interest rates on our net interest margin mainly because over half of our loans are structured to include rate floors. Nonetheless, it is difficult to protect ourselves completely from the cumulative impact of a 200 basis point change in rates in a three-month period," stated Jim Burgess, chief financial officer. "Given the recent cuts in the federal funds rate on January 22, January 30 and March 18, 2008 we proactively re-priced deposits to partially offset compression of our yield on earning assets." 1st Pacific's net interest margin was 4.60% for the first quarter of 2008 compared with 4.71% for the previous linked quarter and 4.93% for the first quarter a year ago.
Non-interest income for the first quarter increased 36% to $231,600 from $169,900 for the year-ago quarter. The increase primarily reflects higher service charges and account fees, which increased nearly 89% from the year ago period. In the first quarter a year ago 1st Pacific reported brokered loan fees and gain on loan sales totaling $47,800 whereas no such income was realized for this year's first quarter.
Total non-interest expenses declined from $3.97 million in the fourth quarter of 2007 to $3.89 million in the first quarter of 2008. This reduction in expenses was primarily attributable to a decrease in other non-interest expenses of $296,000 compared to the prior quarter as a result of diligent expense control efforts in the areas of marketing, HR and training, and administrative expenses as well as additional cost savings associated with the Landmark acquisition and nonrecurring costs in the fourth quarter of 2007 related to a robbery loss and various legal matters. Although salary and benefits expenses increased $213,000, total FTEs only increased from 107 to 109 to fill vacant positions. The increase is related to reduced loan production and related deferred costs in the first quarter of 2008, and increased employer payroll taxes.
Balance Sheet Performance
"Compared to the prior quarter, loan totals declined slightly, due to reductions in classified loans and commercial real estate," said Siciliano. "However, we are well positioned to capture ongoing growth opportunities going forward with our recent acquisition of Landmark, and our newest downtown San Diego branch." Total loans increased 22% to $342 million at the end of March 2008 from $280 million a year ago.
"We continue to actively manage our loan portfolio to reduce our exposure to areas such as construction and land development and we do not engage in residential mortgage lending, and consequently, have no sub-prime mortgages in our loan portfolio," added Siciliano. 1st Pacific Bank continues to grow commercial loans and reduce its exposure to construction & land (C&L) loans. Commercial loans account for 22% of total loans and C&L loans account for 36% of total loans. Residential and commercial real estate account for 35% of total loans, small business administration loans make up 4% of total loans and consumer loans account for 3% of total loans.
"Asset quality remains an important focus for us and we place a strong emphasis on maintaining our credit standards," said Burgess. "We anticipate that the level of nonperforming assets will be manageable going forward primarily due to our strong underwriting and the fact that our portfolio is substantially within our market area, San Diego County." Nonperforming assets totaled $4.3 million, or 1.01% of total assets, at March 31, 2008, compared with $5.6 million, or 1.34% of total assets, at end of the preceding quarter and $6.3 million, or 1.5% of total assets at the end of September 2007.
Net loan charge-offs were $25,000 during the first quarter of 2008 and the allowance for loan losses was $4.5 million, or 1.31% of total loans, compared with $3.3 million, or 1.19%, in the first quarter of 2007. The allowance for loans losses in the fourth quarter of 2007 was $4.5 million or 1.29% of total loans.
Deposits increased 20% to $323 million at March 31, 2008, compared to a year ago, reflecting a $53.9 million increase in the twelve months period. The increase in deposits is primarily attributed to acquiring Landmark National Bank. Total assets increased 34% to $422 million at March 31, 2008, representing a $107 million gain from year-ago levels of $316 million.
Shareholders' equity for the quarter ended March 31, 2008, increased 70% year over year. At March 31, 2008, shareholders' equity was $45.4 million compared with $26.7 million at the end of March 2007. The $18.7 million rise in equity primarily reflects the issuance of stock associated with the July 2007 acquisition of Landmark. In connection with the acquisition, 1st Pacific paid $8.6 million in cash and issued 1.0 million shares of common stock, resulting in $15.9 million of additional equity. The acquisition added $12.0 million to goodwill and other intangibles. Tangible book value per share totaled $6.78 at March 31, 2008, versus $6.86 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. 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 Securities and Exchange Commission. 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
Mar 31, 2008 Dec 31, 2007 Mar 31, 2007 % Change
------------ ------------ ------------ --------
ASSETS
Cash and due from
banks $ 7,844,401 $ 6,397,189 $ 5,515,000 42%
Federal funds sold 12,255,000 11,160,000 17,375,000 -29%
------------ ------------ ------------
Total cash and
cash
equivalents 20,099,401 17,557,189 22,890,000 -12%
Investment
securities
available for
sale 35,802,333 23,746,429 8,780,059 308%
FRB, FHLB and
other equity
stock, at cost 4,076,150 3,184,200 2,110,100 93%
Construction &
Land 122,976,822 125,661,143 109,903,840 12%
Residential &
Comm'l RE 120,983,620 120,530,541 87,033,528 39%
SBA 7a & 504 Loans 12,264,495 15,880,428 19,619,738 -37%
Commercial Loans 75,998,781 77,581,769 58,478,979 30%
Other Consumer 10,015,265 10,164,841 4,995,707 100%
------------ ------------ ------------
Total loans and
leases 342,238,983 349,818,722 280,031,792 22%
Allowance for Loan
Losses (4,491,625) (4,516,625) (3,328,102) 35%
------------ ------------ ------------
Total loans and
leases, net 337,747,358 345,302,097 276,703,690 22%
Premises and
Equipment, net 3,971,972 4,094,785 1,493,318 166%
Goodwill and Other
Intangible Assets 11,857,184 11,906,536 0 NA
Accrued Interest
and Other Assets 8,721,463 8,856,089 3,582,064 143%
------------ ------------ ------------
Total Assets $422,275,861 $414,647,325 $315,559,231 34%
============ ============ ============
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Deposits:
Noninterest-
bearing demand $ 69,899,856 $ 73,366,761 $ 48,261,279 45%
Interest bearing
checking 18,257,780 16,344,597 13,605,014 34%
Savings and Money
Market 101,054,383 98,639,209 90,389,640 12%
Time Deposits 133,465,164 157,011,040 116,536,936 15%
------------ ------------ ------------
Total Deposits 322,677,183 345,361,607 268,792,869 20%
Subordinated
Debentures 10,155,000 10,155,000 5,000,000 103%
Other borrowed
money 40,000,000 10,000,000 14,000,000 186%
Accrued interest
and other
liabilities 4,029,325 4,156,771 1,061,195 280%
------------ ------------ ------------
Total liabilities 376,861,508 369,673,378 288,854,064 30%
Shareholders'
Equity:
Common stock and
additional paid-
in capital 37,474,372 37,378,697 20,813,728 80%
Retained Earnings 8,096,256 7,649,040 5,856,291 38%
Accumulated other
comprehensive
income(loss) (156,275) (53,790) 35,148 -545%
------------ ------------ ------------
Total
shareholders'
equity 45,414,353 44,973,947 26,705,167 70%
------------ ------------ ------------
Total liabilities
and shareholders'
equity $422,275,861 $414,647,325 $315,559,231 34%
============ ============ ============
1st Pacific Bancorp
CONSOLIDATED REPORTS OF INCOME - QUARTERLY
(Unaudited)
Mar 31, Dec 31, Sept 30, Jun 30, Mar 31,
2008 2007 2007 2007 2007
---------- ---------- ---------- ---------- ----------
INTEREST
INCOME
Loans,
including
fees $6,710,716 $7,273,105 $7,710,800 $6,187,879 $6,069,825
Investment
securities 363,169 355,652 318,829 144,061 132,512
Federal funds
sold 145,101 281,867 244,431 237,155 245,311
------------------------------------------------------
Total
interest
income 7,218,986 7,910,624 8,274,060 6,569,095 6,447,648
------------------------------------------------------
INTEREST
EXPENSE
Deposits 2,506,594 2,909,219 3,040,899 2,382,268 2,415,049
Subordinated
debt and
other
borrowings 290,515 297,920 200,810 419,089 295,108
------------------------------------------------------
Total
interest
expense 2,797,109 3,207,139 3,241,709 2,801,357 2,710,157
------------------------------------------------------
Net Interest
Income 4,421,877 4,703,485 5,032,351 3,767,738 3,737,491
Provision for
Loan Losses 0 150,000 37,000 74,000 77,000
------------------------------------------------------
Net interest
income after
provision
for loan
losses 4,421,877 4,553,485 4,995,351 3,693,738 3,660,491
------------------------------------------------------
NON INTEREST
INCOME
Service
charges, fees
and other
income 231,589 185,624 177,618 95,911 122,102
Brokered loan
fees and
gains on loan
sales 0 0 0 80,493 47,790
------------------------------------------------------
Total non
interest
income 231,589 185,624 177,618 176,404 169,892
NON INTEREST
EXPENSE
Salaries and
benefits 2,276,656 2,063,900 2,181,582 1,584,469 1,629,765
Occupancy and
equipment 746,971 747,683 787,989 401,672 400,173
Other expense 862,123 1,158,180 1,029,544 752,336 664,328
------------------------------------------------------
Total non
interest
expense 3,885,750 3,969,763 3,999,115 2,738,477 2,694,266
------------------------------------------------------
Income before
income tax
expense 767,716 769,346 1,173,854 1,131,665 1,136,117
Income tax
expense 320,500 326,269 488,629 467,219 463,684
------------------------------------------------------
Net Income $447,216 $443,077 $685,225 $664,446 $672,433
======================================================
Basic earnings
per share $0.09 $0.09 $0.14 $0.17 $0.17
Diluted
earnings per
share $0.09 $0.09 $0.13 $0.16 $0.16
Average shares
outstanding 4,947,106 4,920,795 4,910,354 3,899,132 3,890,484
Average
diluted
shares
outstanding 5,125,317 5,163,053 5,212,129 4,233,262 4,228,740
1st Pacific Bancorp
First Quarter 2008 Results
(Unaudited)
(dollars in Quarterly
thousands ------------------------------------------------------
except per 2008 2007 2007 2007 2007
share data) 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
------------------------------------------------------
EARNINGS
Net interest
income $ 4,422 4,703 5,032 3,768 3,737
Provision
for loan
losses $ 0 150 37 74 77
NonInterest
income $ 232 186 178 176 170
NonInterest
expense $ 3,886 3,970 3,999 2,738 2,694
Net income $ 447 443 685 664 672
Basic
earnings
per share $ 0.09 0.09 0.14 0.17 0.17
Diluted
earnings
per share $ 0.09 0.09 0.13 0.16 0.16
Average
shares
outstanding 4,947,106 4,920,795 4,910,354 3,899,132 3,890,484
Average
diluted
shares
outstanding 5,125,317 5,163,053 5,212,129 4,233,262 4,228,740
PERFORMANCE
RATIOS
Return on
average
assets 0.44% 0.42% 0.66% 0.83% 0.87%
Return on
average
common equity 3.94% 3.91% 6.20% 9.84% 10.36%
Net interest
margin (fully
tax-
equivalent) 4.60% 4.71% 5.03% 4.80% 4.93%
Efficiency
ratio 83.50% 81.20% 76.76% 69.43% 68.95%
CAPITAL
Tangible
equity to
assets 8.18% 8.21% 7.88% 8.80% 8.46%
Tangible
book value
per share $ 6.78 6.69 6.56 7.04 6.86
ASSET
QUALITY
Net loan
charge-
offs
(recoveries) $ 25 98 (0) (0) (0)
Allowance
for loan
losses $ 4,492 4,517 4,465 3,402 3,328
Allowance for
losses to
total loans 1.31% 1.29% 1.28% 1.21% 1.19%
Nonperforming
loans $ 4,255 5,554 6,336 4,724 0
Other real
estate
owned $ 0 0 0 0 0
Nonperforming
assets to
total assets 1.01% 1.34% 1.50% 1.51% 0.00%
END OF PERIOD
BALANCES
Total Loans $ 342,239 349,819 350,128 282,249 280,032
Total assets $ 422,276 414,647 421,184 312,129 315,559
Deposits $ 322,677 345,362 352,158 273,150 268,793
Shareholders'
equity $ 45,414 44,974 44,302 27,474 26,705
Full-time
equivalent
employees 109 107 101 77 71
AVERAGE
BALANCES
Total Loans $ 341,070 345,918 352,384 285,352 277,367
Earning
Assets $ 385,470 396,221 397,059 314,564 307,220
Total assets $ 411,966 423,198 412,800 321,626 314,849
Deposits $ 338,375 352,717 354,492 264,022 266,117
Shareholders'
equity $ 45,489 44,905 43,840 27,090 26,321