SAN DIEGO, July 28, 2008 (PRIME NEWSWIRE) -- 1st Pacific Bancorp (Nasdaq:FPBN), the holding company for 1st Pacific Bank of California, today reported a net loss for the second quarter ended June 30, 2008 of $1.7 million, or $0.34 per diluted share, compared to net income of $447,200, or $0.09 per diluted share, for the first quarter of 2008, and net income of $664,439, or $0.16 per diluted share, for the second quarter of 2007. The loss was the result of adding $3.6 million to the allowance for loan losses.
The $3.6 million addition to the loan loss reserve was in large part due to identifying two loans totaling $4.9 million to one borrower, both of which are now in default. Before establishing the amount of the provision for loan losses, a review of the entire loan portfolio was conducted to determine the adequacy of the reserve. "We are satisfied based on this review that the bank is properly reserved at this time," said Acting President and CEO Ron Carlson.
1st Pacific Bank remains "well capitalized" by regulatory standards with a Total Risk-Based capital ratio of 10.98% and a Tier 1 Risk-Based capital ratio of 8.53%. To be considered "well capitalized" a bank must have over 10% Total Risk-Based capital and 6% Tier 1 Risk-Based capital.
Compared to the prior quarter, total assets increased $30 million or 7.1% to $452 million. Asset growth was centered in loans, which increased $34 million or 10.0% over the prior quarter to $377 million at June 30, 2008.
"The Bank has a diversified deposit base provided by our eight branches and maintains significant liquidity sources through its FHLB membership, correspondent bank lines of credit, and access to the brokered deposit market," commented Jim Burgess, Chief Financial Officer. "These liquidity facilities have proven to be valuable resources in the past and provide strength to our liquidity position given the current market environment."
Asset Quality
Nonperforming assets were $11.6 million, or 2.57% of total assets, at June 30, 2008, compared with $4.3 million, or 1.01% of total assets, at the end of the preceding quarter and $4.7 million, or 1.51% of total assets at the end of June 2007. Nonperforming assets at the end of June 2008 included balances of approximately $1.0 million guaranteed by the U.S. Small Business Administration (SBA).
"Asset quality is a very important focus for us," said Carlson. "Our team is working closely with customers to assure that we all weather this challenging economic cycle with as few problems as possible. The Bank was not involved in sub-prime real estate lending, which has plagued the economy for months," he added. "However, the entire economy and the entire banking industry have been negatively impacted by the downturn that resulted."
The allowance for loan losses at June 30, 2008, totals $7.8 million, or 2.08% of total loans, compared with an allowance of $4.5 million, or 1.31% of total loans, at March 31, 2008. The allowance for loan losses totaled $3.4 million, or 1.21% of total loans at June 30, 2007.
Review of Operations
1st Pacific's net interest margin was 4.32% for the second quarter of 2008, compared with 4.60% for the previous quarter, and 4.80% for the second quarter of 2007. For the first six months of the year, the net interest margin was 4.45% compared with 4.87% for the first six months of 2007. The cost of funding earning assets decreased 49 basis points while asset yields decreased 77 basis points compared with the preceding quarter.
"Despite an increase in average earning assets during the quarter, we continue to experience a declining net interest margin, as the full impact of the Federal Reserve's rate cuts earlier this year are realized," said Burgess. "In addition, non-accruing loans reduced the margin by approximately 19 basis points in this year's second quarter."
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 has been named a "Premier Performing Bank" for the past three calendar years by Findley Reports and has a Four Star-Rating of "Excellent" from BauerFinancial, Inc., an independent rating service, based on March 31, 2008 results.
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: 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 Second Quarter 2008 Results (Unaudited) THREE MONTHS ENDED SIX MONTHS ENDED Jun 30, 2008 Jun 30, 2007 Jun 30, 2008 Jun 30, 2007 ----------- ----------- ----------- ----------- INTEREST INCOME Loans, including fees $ 6,347,085 $ 6,187,879 $13,057,801 $12,257,704 Investment securities 573,834 144,061 937,003 276,573 Federal funds sold 53,614 237,155 198,715 482,466 ----------- ----------- ----------- ----------- Total interest income 6,974,533 6,569,095 14,193,519 13,016,743 ----------- ----------- ----------- ----------- INTEREST EXPENSE Deposits 2,034,076 2,382,268 4,540,670 4,797,317 Subordinated debt and other borrowings 470,595 419,089 761,110 714,197 ----------- ----------- ----------- ----------- Total interest expense 2,504,671 2,801,357 5,301,780 5,511,514 ----------- ----------- ----------- ----------- Net Interest Income 4,469,862 3,767,738 8,891,739 7,505,229 Provision for Loan Losses 3,550,000 74,000 3,550,000 151,000 ----------- ----------- ----------- ----------- Net interest income after provision for loan losses 919,862 3,693,738 5,341,739 7,354,229 NON INTEREST INCOME Service charges, fees and other income 265,903 95,911 497,492 218,013 Brokered loan fees and gains on loan sales 60,950 80,493 60,950 128,283 ----------- ----------- ----------- ----------- Total non interest income 326,853 176,404 558,442 346,296 NON INTEREST EXPENSE Salaries and benefits 2,443,546 1,584,469 4,720,202 3,214,234 Occupancy and equipment 760,530 401,672 1,507,501 801,845 Other expense 936,238 752,348 1,798,361 1,416,676 ----------- ----------- ----------- ----------- Total non interest expense 4,140,314 2,738,489 8,026,064 5,432,755 ----------- ----------- ----------- ----------- Income (loss) before income tax expense (2,893,599) 1,131,653 (2,125,883) 2,267,770 Income tax expense (benefit) (1,187,600) 467,214 (867,100) 930,898 ----------- ----------- ----------- ----------- Net Income (Loss) ($1,705,999) $ 664,439 ($1,258,783) $ 1,336,872 =========== =========== =========== =========== Basic earnings (loss) per share ($0.34) $0.17 ($0.25) $0.34 Diluted earnings (loss) per share ($0.34) $0.16 ($0.25) $0.32 Average shares outstanding 4,947,763 3,899,132 4,947,435 3,894,808 Average diluted shares outstanding 5,076,791 4,233,262 5,109,015 4,231,001 1st Pacific Bancorp Second Quarter 2008 Results (Unaudited) Annual % -------- Jun 30, 2008 Dec 31, 2007 Jun 30, 2007 Change ------------ ------------ ------------ -------- ASSETS Cash and due from banks $ 8,522,149 $ 6,397,189 $ 6,085,134 40.0% Federal funds sold 7,605,000 11,160,000 10,140,000 -25.0% ---------------------------------------- Total cash and cash equivalents 16,127,149 17,557,189 16,225,134 -0.6% Investment securities available for sale 35,856,520 23,746,429 8,416,971 326.0% FRB, FHLB and other equity stock, at cost 5,574,650 3,184,200 2,612,300 113.4% Construction & Land 125,809,008 125,661,143 105,574,792 19.2% Residential & Comm'l RE 153,096,474 120,530,541 98,790,861 55.0% SBA 7a & 504 Loans 12,834,832 15,880,428 14,060,974 -8.7% Commercial Loans 74,238,526 77,581,769 57,804,497 28.4% Other Consumer 10,539,086 10,164,841 6,018,046 75.1% ---------------------------------------- Total loans and leases 376,517,926 349,818,722 282,249,170 33.4% Allowance for Loan Losses (7,818,471) (4,516,625) (3,402,102) 129.8% ---------------------------------------- Total loans and leases, net 368,699,455 345,302,097 278,847,068 32.2% Premises and Equipment, net 3,873,502 4,094,785 1,938,323 99.8% Goodwill and Other Intangible Assets 11,815,393 11,906,536 0 n/a Accrued Interest and Other Assets 10,247,757 8,856,089 4,089,445 150.6% ---------------------------------------- Total Assets $452,194,426 $414,647,325 $312,129,241 44.9% ======================================== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest- bearing demand $ 68,747,742 $ 73,366,761 $ 51,716,519 32.9% Interest bearing checking 14,121,446 16,344,597 14,403,979 -2.0% Savings and Money Market 115,044,339 98,639,209 84,847,163 35.6% Time Deposits 146,437,993 157,011,040 122,182,245 19.9% ---------------------------------------- Total Deposits 344,351,520 345,361,607 273,149,906 26.1% Subordinated Debentures 10,155,000 10,155,000 10,155,000 0.0% Other borrowed money 50,000,000 10,000,000 0 n/a Accrued interest and other liabilities 4,001,547 4,156,771 1,350,491 196.3% ---------------------------------------- Total liabilities 408,508,067 369,673,378 284,655,397 43.5% Shareholders' Equity: Common stock and additional paid-in capital 37,549,472 37,378,697 20,918,348 79.5% Retained Earnings 6,390,257 7,649,040 6,520,730 -2.0% Accumulated other comprehensive income (loss) (253,370) (53,790) 34,766 -828.8% ---------------------------------------- Total shareholders' equity 43,686,359 44,973,947 27,473,844 59.0% ---------------------------------------- Total liabilities and shareholders' equity $452,194,426 $414,647,325 $312,129,241 44.9% ======================================== 1st Pacific Bancorp Second Quarter 2008 Results (Unaudited) (dollars in Quarterly thousands ------------------------------------------------------ except per 2008 2008 2007 2007 2007 share data) 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr ------------------------------------------------------ EARNINGS Net interest income $ 4,470 4,422 4,703 5,032 3,768 Provision for loan losses $ 3,550 0 150 37 74 NonInterest income $ 327 232 186 178 176 NonInterest expense $ 4,140 3,886 3,970 3,999 2,738 Net income (loss) $ (1,706) 447 443 685 664 Basic earnings (loss) per share $ (0.34) 0.09 0.09 0.14 0.17 Diluted earnings (loss) per share $ (0.34) 0.09 0.09 0.13 0.16 Average shares outstanding 4,947,763 4,947,106 4,920,795 4,910,354 3,899,132 Average diluted shares outstanding 5,076,791 5,125,317 5,163,053 5,212,129 4,233,262 PERFORMANCE RATIOS Return on average assets -1.55% 0.44% 0.42% 0.66% 0.83% Return on average common equity -14.88% 3.94% 3.91% 6.20% 9.84% Net interest margin 4.32% 4.60% 4.71% 5.03% 4.80% Efficiency ratio 86.32% 83.50% 81.20% 76.76% 69.43% CAPITAL Tangible equity to assets 7.24% 8.18% 8.21% 7.88% 8.80% Tangible book value per share $ 6.44 6.78 6.69 6.56 7.04 ASSET QUALITY Net loan charge-offs (recov- eries) $ 223 25 98 (0) (0) Allowance for loan losses $ 7,818 4,492 4,517 4,465 3,402 Allowance for losses to total loans 2.08% 1.31% 1.29% 1.28% 1.21% Nonperforming loans $ 11,640 4,255 5,554 6,336 4,724 Other real estate owned $ 0 0 0 0 0 Nonperforming assets to total assets 2.57% 1.01% 1.34% 1.50% 1.51% END OF PERIOD BALANCES Total Loans $ 376,518 342,239 349,819 350,128 282,249 Total assets $ 452,194 422,276 414,647 421,184 312,129 Deposits $ 344,352 322,677 345,362 352,158 273,150 Shareholders' equity $ 43,686 45,414 44,974 44,302 27,474 Full-time equivalent employees 106 109 107 101 77 AVERAGE BALANCES Total Loans $ 364,791 341,070 345,918 352,384 285,352 Earning Assets $ 415,197 385,470 396,221 397,059 314,564 Total assets $ 442,380 411,966 423,198 412,800 321,626 Deposits $ 334,770 338,375 352,717 354,492 264,022 Shareholders' equity $ 45,989 45,489 44,905 43,840 27,090 6 Months Year-To-Date --------------------- (dollars in thousands except per share data) 2008 2007 --------------------- EARNINGS Net interest income 8,892 7,505 Provision for loan losses 3,550 151 NonInterest income 558 346 NonInterest expense 8,026 5,433 Net income (loss) (1,259) 1,337 Basic earnings (loss) per share (0.25) 0.34 Diluted earnings (loss) per share (0.25) 0.32 Average shares outstanding 4,947,435 3,894,808 Average diluted shares outstanding 5,109,015 4,231,001 PERFORMANCE RATIOS Return on average assets -0.59% 0.85% Return on average common equity -5.52% 10.10% Net interest margin 4.45% 4.87% Efficiency ratio 84.93% 69.19% CAPITAL Tangible equity to assets 7.24% 8.80% Tangible book value per share 6.44 7.04 ASSET QUALITY Net loan charge-offs (recoveries) 248 (0) Allowance for loan losses 7,818 3,402 Allowance for losses to total loans 2.08% 1.21% Nonperforming loans 11,640 4,724 Other real estate owned 0 0 Nonperforming assets to total assets 2.57% 1.51% END OF PERIOD BALANCES Total Loans 376,518 282,249 Total assets 452,194 312,129 Deposits 344,352 273,150 Shareholders' equity 43,686 27,474 Full-time equivalent employees 106 77 AVERAGE BALANCES Total Loans 352,931 281,381 Earning Assets 400,334 310,912 Total assets 427,173 318,344 Deposits 336,573 265,064 Shareholders' equity 45,739 26,705