First Quarter Summary
Pacific Mercantile Bancorp (Nasdaq: PMBC), the holding company of
Pacific Mercantile Bank (the “Bank”), a wholly owned banking
subsidiary, today reported its financial results for the three
months ended March 31, 2019.
For the first quarter of 2019, the Company
reported net income of $882 thousand, or $0.04 per fully diluted
share. This compares to net income of $4.4 million, or $0.19 per
fully diluted share, in the fourth quarter of 2018, and net income
of $3.7 million, or $0.16 per fully diluted share, in the first
quarter of 2018. The decrease in net income, as compared to the
three months ended December 31, 2018, is primarily attributable to
an increase in our provision for loan and lease losses as a result
of a large charge off related to one loan relationship.
Commenting on the results, Tom Vertin, President
& CEO of Pacific Mercantile Bancorp, said, “We executed well in
the first quarter and had positive trends in many key areas
including business development, expense management, and
non-interest income generation. Although the first quarter is
typically a seasonally soft quarter for loan production, we saw a
significant increase in new loan commitments and loan fundings
relative to the first quarter of 2018. We also saw strong
inflows of commercial deposits, which reflects our focus on banking
strong, growing operating companies that are successfully building
their businesses and raising capital.”
Mr. Vertin continued, “Our overall results were
negatively impacted by the provision related to one commercial loan
within the entertainment industry, which has been completely
charged-off. The loan was current on principal and interest
payments during the first quarter, but we recently received
information indicating a diversion of collateral proceeds that has
prevented repayment of the outstanding balance. We have been
proactive in our loss recognition by charging off the remaining
balance while we pursue a recovery through legal measures. We
have also had a third-party review of our remaining entertainment
industry related commercial loans, which has confirmed that all the
outstanding loans are performing well. Excluding this one
credit, we saw positive trends in asset quality throughout the
broader loan portfolio with a reduction in classified and
non-performing assets during the quarter. As we continue to
execute well and our provision expense returns to a more normalized
level, we expect to deliver a higher level of earnings as we move
through 2019.”
Results of Operations
The following table shows our operating results
for the three months ended March 31, 2019, as compared to the
three months ended December 31, 2018 and the three months
ended March 31, 2018. The discussion below highlights the key
factors contributing to the changes shown in the following
table.
|
Three Months Ended |
|
March 31, 2019 |
|
December 31, 2018 |
|
March 31, 2018 |
|
|
|
|
|
|
|
($ in thousands) |
Total interest
income |
$ |
16,167 |
|
|
$ |
16,395 |
|
|
$ |
15,015 |
|
Total interest
expense |
4,116 |
|
|
3,793 |
|
|
2,830 |
|
Net interest
income |
12,051 |
|
|
12,602 |
|
|
12,185 |
|
Provision for loan and
lease losses |
3,300 |
|
|
— |
|
|
— |
|
Total noninterest
income |
1,490 |
|
|
1,328 |
|
|
1,055 |
|
Total noninterest
expense |
8,983 |
|
|
9,135 |
|
|
9,533 |
|
Income tax (benefit)
provision |
376 |
|
|
431 |
|
|
— |
|
Net income |
$ |
882 |
|
|
$ |
4,364 |
|
|
$ |
3,707 |
|
Net Interest Income
Q1 2019 vs Q4 2018. Net
interest income decreased $551 thousand, or 4.4%, for the three
months ended March 31, 2019 as compared to the three months
ended December 31, 2018 primarily as a result of:
- A decrease in interest income of
$228 thousand, or 1.4%, primarily attributable to a decrease in
interest earned on loans as a result of a lower average balance
during the three months ended March 31, 2019 and the average yield
remaining flat at 5.45% for the three months ended March 31,
2019 and the three months ended December 31, 2018. The average
yield on loans during the three months ended December 31, 2018 was
favorably impacted by a prepayment penalty of $190 thousand on one
loan relationship during the fourth quarter of 2018 and interest
income recoveries of $252 thousand in the fourth quarter of
2018, while the average yield on loans during the three
months ended March 31, 2019 was unfavorably impacted by the
reversal of $114 thousand of interest income during the first
quarter of 2019, which in the aggregate represent an impact of 21
basis points. The average yield on loans during the three months
ended March 31, 2019 was also favorably impacted by the rising
interest rate environment. The decrease in the average yield on
securities available for sale and stock is a result of a Federal
Home Loan Bank (“FHLB”) special dividend of $83 thousand received
during December 2018. The increase in the average yield on short
term investments is a result of the rising interest rate
environment; and
- An increase in interest expense of
$323 thousand, or 8.5%, primarily attributable to an increase in
the rates of interest paid on our deposits for the three months
ended March 31, 2019 as compared to the three months ended
December 31, 2018, which was primarily the result of an
increase in the rate of interest paid on interest bearing deposits
resulting from the rising interest rate environment.
Our net interest margin decreased to 3.63% for
the three months ended March 31, 2019 as compared to 3.78% for
the three months ended December 31, 2018. The decrease is
primarily attributable to the fluctuations within our interest
income on loans described above, and an increase in the cost of
interest bearing liabilities resulting from an increase in
prevailing interest rates. Adjusting for those fluctuations, we
would have a net favorable variance in our net interest margin of
three basis points from December 31, 2018 to March 31, 2019.
Q1 2019 vs Q1 2018. Net
interest income decreased $134 thousand, or 1.1%, for the three
months ended March 31, 2019 as compared to the three months
ended March 31, 2018 primarily as a result of:
- An increase in interest expense of
$1.3 million, or 45.4%, primarily attributable to an increase in
the volume of and rates of interest paid on our deposits for the
three months ended March 31, 2019 as compared to the three
months ended March 31, 2018, which was primarily the result of
higher deposits due to new client acquisition, and our decision to
increase the rate of interest paid on our non-maturing interest
bearing deposits and our certificates of deposit resulting from the
rising interest rate environment; partially offset by
- An increase in interest income of
$1.2 million, or 7.7%, primarily attributable to an increase in
interest earned on loans and short-term investments as a result of
higher average balances and an increase in the average yield during
the three months March 31, 2019 as compared to the three
months ended March 31, 2018, which was primarily the result of
the rising interest rate environment.
Provision for Loan and Lease
Losses
Q1 2019 vs Q4 2018. We recorded
a $3.3 million provision for loan and lease losses during the three
months ended March 31, 2019 as a result of total charge offs
of $5.7 million, which primarily related to one large credit,
partially offset by a decline in the level of classified
assets. We recorded no provision for loan and lease losses
during the three months ended December 31, 2018 primarily as a
result of reserves for new loan growth being offset by a decline in
the level of classified assets. During the three months ended
March 31, 2019, we had net charge-offs of $5.3 million,
compared to net recoveries of $43 thousand for the three months
ended December 31, 2018.
Q1 2019 vs Q1 2018. We recorded
a $3.3 million provision for loan and lease losses during the three
months ended March 31, 2019 as a result of total charge offs
of $5.7 million, which primarily related to one large credit,
partially offset by a decline in the level of classified assets. We
recorded no provision for loan and lease losses during the three
months ended March 31, 2018 primarily as a result of reserves
for new loan growth being offset by a decline in the level of
classified assets.
Noninterest Income
Q1 2019 vs Q4 2018. Noninterest
income increased $162 thousand, or 12.2%, for the three months
ended March 31, 2019 as compared to the three months ended
December 31, 2018, primarily resulting from an increase in
gain on sale of small business administration (“SBA”) loans during
the first quarter of 2019 as compared to the prior quarter.
Q1 2019 vs Q1 2018. Noninterest
income increased by $435 thousand, or 41.2%, for the three months
ended March 31, 2019 as compared to the three months ended
March 31, 2018, primarily as a result of:
- An increase in gain on sale of SBA
loans during the first quarter of 2019 as compared to the same
period in 2018; and
- An increase in credit card and wire
transfer fees during the first quarter of 2019 as compared to the
same period in 2018; partially offset by
- A gain of $48 thousand on the sale
of securities available for sale during the three months ended
March 31, 2018 that did not occur in the same period in 2019.
Noninterest Expense
Q1 2019 vs Q4 2018. Noninterest
expense decreased $152 thousand, or 1.7%, for the three months
ended March 31, 2019 as compared to the three months ended
December 31, 2018, primarily as a result of:
- A decrease of $423 thousand in
salaries and employee benefits primarily related to a decrease in
the incentive compensation accrual during the first quarter of
2019; and
- A decrease of $63 thousand in our
other real estate owned expense during the three months ended March
31, 2019 as compared to the three months ended December 31, 2018;
partially offset by
- An increase of $369 thousand in our
professional fees primarily related to the recovery of legal fees
attributable to a loan relationship during the fourth quarter of
2018 that was fully charged off in previous years.
Q1 2019 vs Q1 2018. Noninterest
expense decreased $550 thousand, or 5.8%, for the three months
ended March 31, 2019 as compared to the three months ended
March 31, 2018, primarily as a result of:
- A decrease of $719 thousand in
salaries and employee benefits primarily related to a decrease in
the incentive compensation accrual during the first quarter of
2019;
- A decrease of $118 thousand in our
FDIC insurance expenses primarily related to a decrease in our
premium; partially offset by
- An increase of $47 thousand in our
professional fees primarily related to higher legal fees in the
first quarter of 2019;
- An increase of $126 thousand in our
data processing fees primarily related to a higher loan and deposit
volume in the first quarter of 2019; and
- An increase in various expense
accounts related to the normal course of operating, including
expenses related to loan production and business development during
the three months ended March 31, 2019 as compared to the three
months ended March 31, 2018.
Income tax provision
(benefit)
For the three months ended March 31, 2019,
we had an income tax expense of $376 thousand. The income tax
expense during the three months ended March 31, 2019 is a
result of our operating income. Accounting rules specify that
management must evaluate the deferred tax asset on a recurring
basis to determine whether enough positive evidence exists to
determine whether it is more-likely-than-not that the deferred tax
asset will be available to offset or reduce future taxes. The
tax code allows net operating losses incurred prior to December 31,
2017 to be carried forward for 20 years from the date of the loss,
and based on its evaluation, management believes that the Company
will be able to realize the deferred tax asset within the period
that our net operating losses may be carried forward. Due to
the hierarchy of evidence that the accounting rules specify,
management determined that there continued to be enough positive
evidence to support no valuation allowance on our deferred tax
asset at March 31, 2019.
For the three months ended December 31, 2018, we
had an income tax expense of $431 thousand. The income tax expense
during the three months ended December 31, 2018 is a result of the
true up of our income tax provision.
For the three months ended March 31, 2018,
we had no provision for income tax recorded as a result of our full
valuation allowance. While management believed that the Company
would be able to realize the deferred tax asset within the period
that our net operating losses may be carried forward, we were
unable to assert the timing as to when that realization will
occur. Due to the hierarchy of evidence that the accounting
rules specify, management determined that the full valuation
allowance that was previously established on the balance of our
deferred tax asset was still required at March 31, 2018.
Balance Sheet Information
Loans
As indicated in the table below, at
March 31, 2019, gross loans totaled approximately $1.1
billion, which represented a decrease of $22.0 million, or 2.0%,
compared to gross loans outstanding at December 31, 2018. The
following table sets forth the composition, by loan category, of
our loan portfolio at March 31, 2019 and December 31,
2018.
|
March 31, 2019 |
|
December 31, 2018 |
|
Amount |
|
Percent ofTotalLoans |
|
Amount |
|
Percent ofTotalLoans |
|
|
|
|
|
|
|
|
|
($ in thousands) |
Commercial loans |
$ |
448,021 |
|
|
41.8 |
% |
|
$ |
444,441 |
|
|
40.6 |
% |
Commercial real estate
loans - owner occupied |
213,334 |
|
|
19.9 |
% |
|
211,645 |
|
|
19.3 |
% |
Commercial real estate
loans - all other |
220,106 |
|
|
20.5 |
% |
|
226,441 |
|
|
20.7 |
% |
Residential mortgage
loans - multi-family |
91,856 |
|
|
8.6 |
% |
|
97,173 |
|
|
8.9 |
% |
Residential mortgage
loans - single family |
19,776 |
|
|
1.8 |
% |
|
21,176 |
|
|
1.9 |
% |
Construction and land
development loans |
29,261 |
|
|
2.7 |
% |
|
38,496 |
|
|
3.5 |
% |
Consumer loans |
49,549 |
|
|
4.6 |
% |
|
54,514 |
|
|
5.0 |
% |
Gross loans |
$ |
1,071,903 |
|
|
100.0 |
% |
|
$ |
1,093,886 |
|
|
100.0 |
% |
The decrease of $22.0 million in gross loans
during the first quarter of 2019 was primarily a result of loan
payoffs of $36.8 million and charge offs of $5.7 million, partially
offset by new loan growth and client acquisition. The charge offs
of $5.7 million primarily related to one commercial loan in the
entertainment industry. During the first quarter of 2019, we
secured new commercial loan commitments of $48.0 million, of which
$33.3 million were funded at March 31, 2019. Our total
commercial loan commitments increased to $701.3 million at
March 31, 2019 from $695.8 million at December 31, 2018,
while the utilization rate of commercial loan commitments decreased
slightly to 63.3% at March 31, 2019 from 63.4% at
December 31, 2018.
Subsequent to the end of the first quarter of
2019, the Company received payoff on an $11.8 million entertainment
industry related commercial loan, which reduced the total amount
outstanding of commercial loans in the entertainment industry to
$17.8 million.
Deposits
|
March 31, 2019 |
|
December 31, 2018 |
|
|
|
|
Type of
Deposit |
($ in thousands) |
Noninterest-bearing
checking accounts |
$ |
364,083 |
|
|
$ |
340,406 |
|
Interest-bearing checking accounts |
100,294 |
|
|
64,144 |
|
Money
market and savings deposits |
450,003 |
|
|
460,355 |
|
Certificates of deposit |
266,970 |
|
|
271,097 |
|
Totals |
$ |
1,181,350 |
|
|
$ |
1,136,002 |
|
The increase in our total deposits from
December 31, 2018 to March 31, 2019 is primarily
attributable to an increase of $59.8 million in our checking
accounts, partially offset by a decrease of $10.4 million in money
market and savings deposits and a decrease of $4.1 million in our
certificates of deposit. The increase in our core deposits is the
result of new client acquisition, which has resulted in
relationships with growing operating companies that are attracting
capital investment. The decrease in our certificates of deposit is
primarily the result of our decision to keep the rates of interest
offered on new and renewing certificates of deposit below the rates
offered by many of the other banks against which we compete for
these deposits. Lower priced core deposits increased to 77% of
total deposits, while higher priced certificates of deposit
decreased to 23% of total deposits at March 31, 2019, as
compared to 76% and 24% of total deposits, respectively, at
December 31, 2018.
Asset Quality
Nonperforming Assets
|
2019 |
|
2018 |
March 31 |
|
December 31 |
|
March 31 |
|
|
|
|
|
|
($ in
thousands) |
Total non-performing loans |
$ |
1,321 |
|
|
$ |
4,226 |
|
|
$ |
6,816 |
|
Other real estate owned |
— |
|
|
1,173 |
|
|
2,073 |
|
Other non-performing assets |
96 |
|
|
91 |
|
|
— |
|
Total non-performing assets |
$ |
1,417 |
|
|
$ |
5,490 |
|
|
$ |
8,889 |
|
90-day past due loans(1) |
$ |
— |
|
|
$ |
4,273 |
|
|
$ |
1,385 |
|
Total classified assets |
$ |
4,079 |
|
|
$ |
7,937 |
|
|
$ |
20,580 |
|
Allowance for loan and lease losses |
$ |
11,514 |
|
|
$ |
13,506 |
|
|
$ |
13,405 |
|
Allowance for loan and lease losses /gross
loans |
1.07 |
% |
|
1.23 |
% |
|
1.26 |
% |
Allowance for loan and lease losses /total
assets |
0.82 |
% |
|
1.00 |
% |
|
1.03 |
% |
Ratio of allowance for loan and lease losses to
nonperforming loans |
871.61 |
% |
|
319.59 |
% |
|
196.67 |
% |
Ratio of nonperforming assets to total
assets |
0.10 |
% |
|
0.41 |
% |
|
0.68 |
% |
Net quarterly charge-offs (recoveries) to gross
loans |
0.49 |
% |
|
— |
% |
|
0.07 |
% |
_________________
(1) No loans were 90 days or more past
due at March 31, 2019.
Nonperforming assets at March 31, 2019
decreased $4.1 million from December 31, 2018 as a result of a
decrease in non-performing loans and a decrease in our other real
estate owned in the first quarter of 2019, partially offset by an
increase in our other assets owned. The decrease in our
non-performing loans resulted from principal payments of $2.9
million, charge offs of $49 thousand and the transfer to other
assets of $58 thousand during the three months ended March 31,
2019, partially offset by the addition of $87 thousand of consumer
loans during the same period. The decrease in our other real estate
owned resulted from the sale during the first quarter of 2019 of
the single property owned by the Bank.
Our classified assets decreased by $3.9 million
from $7.9 million at December 31, 2018 to $4.1 million at
March 31, 2019. The decrease is primarily related to
principal payments of $5.3 million, charge offs of $49 thousand,
the transfer to other assets of $58 thousand, and a $1.2 million
decrease in our other real estate owned during the three months
ended December 31, 2018, partially offset by additions of $2.7
million during the same period.
Allowance for loan and lease losses
|
2019 |
|
2018 |
March 31 |
|
December 31 |
|
September 30 |
|
June 30 |
|
March 31 |
|
|
|
|
|
|
|
|
|
|
($ in
thousands) |
Balance at beginning of quarter |
$ |
13,506 |
|
|
$ |
13,463 |
|
|
$ |
13,369 |
|
|
$ |
13,405 |
|
|
$ |
14,196 |
|
Charge offs |
(5,698 |
) |
|
(922 |
) |
|
(419 |
) |
|
(355 |
) |
|
(1,068 |
) |
Recoveries |
406 |
|
|
965 |
|
|
513 |
|
|
319 |
|
|
277 |
|
Provision |
3,300 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Balance at end of quarter |
$ |
11,514 |
|
|
$ |
13,506 |
|
|
$ |
13,463 |
|
|
$ |
13,369 |
|
|
$ |
13,405 |
|
At March 31, 2019, the allowance for loan
and lease losses (“ALLL”) totaled $11.5 million, which was
approximately $2.0 million less than at December 31, 2018 and
$1.9 million less than at March 31, 2018. The ALLL
activity during the three months ended March 31, 2019 included
net charge-offs of $5.3 million. There was a $3.3 million provision
for loan and lease losses during the period, primarily attributable
to one large charge off of $5.6 million during the first quarter of
2019 related to one loan relationship partially offset by a decline
in loan growth and the level of classified assets during the three
months ended March 31, 2019. The ratio of the ALLL-to-total loans
outstanding as of March 31, 2019 was 1.07% as compared to
1.23% and 1.26% as of December 31, 2018 and March 31,
2018, respectively.
Capital Resources
At March 31, 2019, the Bank had total
regulatory capital of $162.9 million. The ratio of the Bank’s
total capital-to-risk weighted assets, which is a principal federal
bank regulatory measure of the financial strength of banking
institutions, was 13.4% which exceeds the minimum for a bank to be
classified under federal bank regulatory guidelines as a
“well-capitalized” banking institution, which is the highest of the
capital standards established by federal banking regulatory
authorities.
The following table sets forth the regulatory
capital and capital ratios of the Bank at March 31, 2019, as
compared to the regulatory requirements that must be met for a
banking institution to be rated as a well-capitalized
institution.
|
ActualAt March 31,
2019 |
|
Federal Regulatory
Requirementto be Rated
Well-Capitalized |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
|
|
|
|
|
|
|
|
|
($ in thousands) |
|
|
|
|
|
|
|
|
Total Capital to Risk
Weighted Assets |
$ |
162,868 |
|
|
13.4 |
% |
|
$ |
121,217 |
|
|
At least 10.0 |
|
|
|
|
|
|
|
|
Common Equity Tier 1
Capital to Risk Weighted Assets |
$ |
151,004 |
|
|
12.5 |
% |
|
$ |
78,791 |
|
|
At
least 6.5 |
|
|
|
|
|
|
|
|
Tier 1 Capital to Risk
Weighted Assets |
$ |
151,004 |
|
|
12.5 |
% |
|
$ |
96,973 |
|
|
At least 8.0 |
|
|
|
|
|
|
|
|
Tier 1 Capital to Average
Assets |
$ |
151,004 |
|
|
10.9 |
% |
|
$ |
69,401 |
|
|
At least 5.0 |
About Pacific Mercantile
Bancorp
Pacific Mercantile Bancorp (Nasdaq: PMBC) is the
parent holding company of Pacific Mercantile Bank, which opened for
business March 1, 1999. The Bank, which is an FDIC insured,
California state-chartered bank and a member of the Federal Reserve
System, provides a wide range of commercial banking services to
businesses, business professionals and individual clients. The Bank
is headquartered in Orange County and operates a total of seven
offices in Southern California, located in Orange, Los Angeles, San
Diego, and San Bernardino counties. The Bank offers tailored
flexible solutions for its clients including an array of loan and
deposit products, sophisticated cash management services, and
comprehensive online banking services accessible at
www.pmbank.com.
Forward-Looking Information
This news release contains statements regarding
our expectations, beliefs and views about our future financial
performance and our business, trends and expectations regarding the
markets in which we operate, and our future plans. Those
statements, which include the quotation from management, constitute
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, can be identified by
the fact that they do not relate strictly to historical or current
facts. Often, they include words such as “believe,” “expect,”
“anticipate,” “intend,” “plan,” “estimate,” “project,” or words of
similar meaning, or future or conditional verbs such as “will,”
“would,” “should,” “could,” or “may.” Forward-looking statements
are based on current information available to us and our
assumptions about future events over which we do not have
control. Moreover, our business and our markets are subject
to a number of risks and uncertainties which could cause our actual
financial performance in the future, and the future performance of
our markets (which can affect both our financial performance and
the market prices of our shares), to differ, possibly materially,
from our expectations as set forth in the forward-looking
statements contained in this news release.
In addition to the risk of incurring loan losses
and provision for loan losses, which is an inherent risk of the
banking business, these risks and uncertainties include, but are
not limited to, the following: the risk that the credit quality of
our borrowers declines; potential declines in the value of the
collateral for secured loans; the risk that steps we have taken to
strengthen our overall credit administration are not effective; the
risk of a downturn in the United States economy, and domestic or
international economic conditions, which could cause us to incur
additional loan losses and adversely affect our results of
operations in the future; the risk that our interest margins and,
therefore, our net interest income will be adversely affected by
changes in prevailing interest rates; the risk of increases in our
nonperforming assets, in which event we would face the prospect of
further loan charge-offs and write-downs of assets; the risk that
we will not be able to manage our interest rate risks effectively,
in which event our operating results could be harmed; the prospect
of changes in government regulation of banking and other financial
services organizations, which could impact our costs of doing
business and restrict our ability to take advantage of business and
growth opportunities; the risk that our efforts to develop a robust
commercial banking platform may not succeed; and the risk that we
may be unable to realize our expected level of increasing deposit
inflows. Readers of this news release are encouraged to
review the additional information regarding these and other risks
and uncertainties to which our business is subject that is
contained in our Annual Report on Form 10-K for the year ended
December 31, 2018, which is on file with the Securities and
Exchange Commission (“SEC”). Additional information will be set
forth in our Quarterly Report on Form 10-Q for the three months
ended March 31, 2019, which we expect to file with the SEC during
the second quarter of 2019, and readers of this release are urged
to review the additional information that will be contained in that
report.
Due to these and other risks and uncertainties
to which our business is subject, you are cautioned not to place
undue reliance on the forward-looking statements contained in this
news release, which speak only as of its date, or to make
predictions about our future financial performance based solely on
our historical financial performance. We disclaim any obligation to
update or revise any of the forward-looking statements as a result
of new information, future events or otherwise, except as may be
required by law.
CONSOLIDATED STATEMENTS OF
OPERATIONS(Dollars and numbers of shares in
thousands, except per share
data)(Unaudited)
|
Three Months Ended |
|
March 31, 2019 |
|
December 31, 2018 |
|
March 31, 2018 |
|
Mar '19 vsDec '18%
Change |
|
Mar '19 vsMar '18 % Change |
Total interest
income |
$ |
16,167 |
|
|
$ |
16,395 |
|
|
$ |
15,015 |
|
|
(1.4 |
)% |
|
7.7 |
% |
Total interest
expense |
4,116 |
|
|
3,793 |
|
|
2,830 |
|
|
8.5 |
% |
|
45.4 |
% |
Net
interest income |
12,051 |
|
|
12,602 |
|
|
12,185 |
|
|
(4.4 |
)% |
|
(1.1 |
)% |
Provision for loan and
lease losses |
3,300 |
|
|
— |
|
|
— |
|
|
100.0 |
% |
|
100.0 |
% |
Net
interest income after provision for loan and lease losses |
8,751 |
|
|
12,602 |
|
|
12,185 |
|
|
(30.6 |
)% |
|
(28.2 |
)% |
Non-interest
income: |
|
|
|
|
|
|
|
|
|
Service
fees on deposits and other banking services |
398 |
|
|
372 |
|
|
387 |
|
|
7.0 |
% |
|
2.8 |
% |
Net gain
(loss) on sale of securities available for sale |
— |
|
|
— |
|
|
48 |
|
|
— |
% |
|
(100.0 |
)% |
Net gain
on sale of small business administration loans |
300 |
|
|
— |
|
|
— |
|
|
100.0 |
% |
|
100.0 |
% |
Net loss
on sale of other assets |
(25 |
) |
|
— |
|
|
(4 |
) |
|
— |
% |
|
525.0 |
% |
Other
non-interest income |
817 |
|
|
956 |
|
|
624 |
|
|
(14.5 |
)% |
|
30.9 |
% |
Total non-interest
income |
1,490 |
|
|
1,328 |
|
|
1,055 |
|
|
12.2 |
% |
|
41.2 |
% |
Non-interest
expense: |
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
5,441 |
|
|
5,864 |
|
|
6,160 |
|
|
(7.2 |
)% |
|
(11.7 |
)% |
Occupancy
and equipment |
1,088 |
|
|
1,050 |
|
|
1,064 |
|
|
3.6 |
% |
|
2.3 |
% |
Professional Fees |
796 |
|
|
427 |
|
|
749 |
|
|
86.4 |
% |
|
6.3 |
% |
OREO
expenses, net |
68 |
|
|
131 |
|
|
— |
|
|
(48.1 |
)% |
|
100.0 |
% |
FDIC
Expense |
164 |
|
|
190 |
|
|
282 |
|
|
(13.7 |
)% |
|
(41.8 |
)% |
Other
non-interest expense |
1,426 |
|
|
1,473 |
|
|
1,278 |
|
|
(3.2 |
)% |
|
11.6 |
% |
Total non-interest
expense |
8,983 |
|
|
9,135 |
|
|
9,533 |
|
|
(1.7 |
)% |
|
(5.8 |
)% |
Income
before income taxes |
1,258 |
|
|
4,795 |
|
|
3,707 |
|
|
(73.8 |
)% |
|
(66.1 |
)% |
Income tax expense |
376 |
|
|
431 |
|
|
— |
|
|
(12.8 |
)% |
|
100.0 |
% |
Net income |
$ |
882 |
|
|
$ |
4,364 |
|
|
$ |
3,707 |
|
|
(79.8 |
)% |
|
(76.2 |
)% |
Basic income per common
share: |
|
|
|
|
|
|
|
|
|
Net
income available to common shareholders |
$ |
0.04 |
|
|
$ |
0.19 |
|
|
$ |
0.16 |
|
|
(78.9 |
)% |
|
(75.0 |
)% |
Diluted income per
common share: |
|
|
|
|
|
|
|
|
|
Net
income available to common shareholders |
$ |
0.04 |
|
|
$ |
0.19 |
|
|
$ |
0.16 |
|
|
(78.9 |
)% |
|
(75.0 |
)% |
Weighted average number
of common shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
21,824 |
|
|
21,800 |
|
|
23,156 |
|
|
0.1 |
% |
|
(5.8 |
)% |
Diluted |
23,547 |
|
|
23,498 |
|
|
23,442 |
|
|
0.2 |
% |
|
0.4 |
% |
Ratios from
continuing operations(1): |
|
|
|
|
|
|
|
|
|
Return on
average assets |
0.26 |
% |
|
1.27 |
% |
|
1.15 |
% |
|
|
|
|
Return on
average equity |
2.50 |
% |
|
12.46 |
% |
|
12.94 |
% |
|
|
|
|
Efficiency ratio |
66.34 |
% |
|
65.58 |
% |
|
72.00 |
% |
|
|
|
|
____________________
(1) Ratios for the three months
ended March 31, 2019, December 31, 2018 and
March 31, 2018 have been annualized.
CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION(Dollars in thousands, except share and
book value data)(Unaudited)
ASSETS |
March 31, 2019 |
|
December 31,2018 |
|
Increase/(Decrease) |
|
|
|
|
Cash and due from banks |
$ |
11,032 |
|
|
$ |
13,250 |
|
|
(16.7 |
)% |
|
Interest bearing deposits with financial
institutions(1) |
246,338 |
|
|
174,468 |
|
|
41.2 |
% |
|
Interest bearing time deposits |
2,420 |
|
|
2,420 |
|
|
— |
% |
|
Investment securities (including stock) |
38,243 |
|
|
40,053 |
|
|
(4.5 |
)% |
|
Loans (net of allowances of $11,514 and $13,506,
respectively) |
1,062,997 |
|
|
1,083,240 |
|
|
(1.9 |
)% |
|
Other real estate owned |
— |
|
|
1,173 |
|
|
(100.0 |
)% |
|
Net deferred tax assets |
10,781 |
|
|
10,935 |
|
|
(1.4 |
)% |
|
Other assets |
26,829 |
|
|
23,799 |
|
|
12.7 |
% |
|
Total assets |
$ |
1,398,640 |
|
|
$ |
1,349,338 |
|
|
3.7 |
% |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
Non-interest bearing deposits |
$ |
364,083 |
|
|
$ |
340,406 |
|
|
7.0 |
% |
|
Interest bearing deposits |
|
|
|
|
|
|
Interest checking |
100,294 |
|
|
64,144 |
|
|
56.4 |
% |
|
Savings/money market |
450,003 |
|
|
460,355 |
|
|
(2.2 |
)% |
|
Certificates of deposit |
266,970 |
|
|
271,097 |
|
|
(1.5 |
)% |
|
Total interest bearing
deposits |
817,267 |
|
|
795,596 |
|
|
2.7 |
% |
|
Total deposits |
1,181,350 |
|
|
1,136,002 |
|
|
4.0 |
% |
|
Other borrowings |
40,000 |
|
|
40,000 |
|
|
— |
% |
|
Other liabilities |
17,147 |
|
|
14,435 |
|
|
18.8 |
% |
|
Junior subordinated debentures |
17,527 |
|
|
17,527 |
|
|
— |
% |
|
Total liabilities |
1,256,024 |
|
|
1,207,964 |
|
|
4.0 |
% |
|
Shareholders’ equity |
142,616 |
|
|
141,374 |
|
|
0.9 |
% |
|
Total
Liabilities and Shareholders’ Equity |
$ |
1,398,640 |
|
|
$ |
1,349,338 |
|
|
3.7 |
% |
|
Book value per share |
$ |
6.09 |
|
|
$ |
6.06 |
|
|
0.5 |
% |
|
Shares outstanding, common |
22,017,758 |
|
|
21,916,195 |
|
|
0.5 |
% |
|
____________________
- Interest bearing deposits held
in the Bank’s account maintained at the Federal Reserve Bank.
- Excludes accumulated other
comprehensive income/loss, which is included in shareholders’
equity.
CONSOLIDATED AVERAGE BALANCES AND YIELD
DATA(Dollars in
thousands)(Unaudited)
|
Three
Months Ended |
|
March 31, 2019 |
|
December 31, 2018 |
|
March 31, 2018 |
|
AverageBalance |
|
InterestEarned/Paid |
|
AverageYield/Rate |
|
AverageBalance |
|
InterestEarned/Paid |
|
AverageYield/Rate |
|
Average Balance |
|
Interest Earned/ Paid |
|
Average Yield/ Rate |
Interest earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments(1) |
$ |
225,561 |
|
|
$ |
1,355 |
|
|
2.44 |
% |
|
$ |
199,990 |
|
|
$ |
1,141 |
|
|
2.26 |
% |
|
$ |
180,605 |
|
|
$ |
696 |
|
|
1.56 |
% |
Securities available for sale and
stock(2) |
|
39,203 |
|
|
292 |
|
|
3.02 |
% |
|
|
39,023 |
|
|
359 |
|
|
3.65 |
% |
|
|
42,968 |
|
|
|
274 |
|
|
2.59 |
% |
Loans(3) |
|
1,080,771 |
|
|
14,520 |
|
|
5.45 |
% |
|
|
1,085,151 |
|
|
14,895 |
|
|
5.45 |
% |
|
|
1,062,938 |
|
|
|
14,045 |
|
|
5.36 |
% |
Total interest-earning assets |
|
1,345,535 |
|
|
16,167 |
|
|
4.87 |
% |
|
|
1,324,164 |
|
|
16,395 |
|
|
4.91 |
% |
|
|
1,286,511 |
|
|
|
15,015 |
|
|
4.73 |
% |
Noninterest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
15,084 |
|
|
|
|
|
|
|
19,955 |
|
|
|
|
|
|
|
15,835 |
|
|
|
|
|
All other assets |
|
29,231 |
|
|
|
|
|
|
|
20,602 |
|
|
|
|
|
|
|
6,383 |
|
|
|
|
|
Total assets |
$ |
1,389,850 |
|
|
|
|
|
$ |
1,364,721 |
|
|
|
|
|
$ |
1,308,729 |
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing checking
accounts |
$ |
95,475 |
|
|
161 |
|
|
0.68 |
% |
|
$ |
71,257 |
|
|
99 |
|
|
0.55 |
% |
|
$ |
84,581 |
|
|
|
113 |
|
|
0.54 |
% |
Money market and savings
accounts |
|
457,975 |
|
|
2,114 |
|
|
1.87 |
% |
|
|
443,149 |
|
|
1,940 |
|
|
1.74 |
% |
|
|
349,330 |
|
|
|
984 |
|
|
1.14 |
% |
Certificates of deposit |
|
272,256 |
|
|
1,349 |
|
|
2.01 |
% |
|
|
277,551 |
|
|
1,299 |
|
|
1.86 |
% |
|
|
358,301 |
|
|
|
1,381 |
|
|
1.56 |
% |
Other borrowings |
|
40,000 |
|
|
258 |
|
|
2.62 |
% |
|
|
40,000 |
|
|
231 |
|
|
2.29 |
% |
|
|
40,044 |
|
|
|
166 |
|
|
1.68 |
% |
Junior subordinated debentures |
|
17,527 |
|
|
234 |
|
|
5.41 |
% |
|
|
17,527 |
|
|
224 |
|
|
5.07 |
% |
|
|
17,527 |
|
|
|
186 |
|
|
4.30 |
% |
Total interest bearing
liabilities |
|
883,233 |
|
|
4,116 |
|
|
1.89 |
% |
|
|
849,484 |
|
|
3,793 |
|
|
1.77 |
% |
|
|
849,783 |
|
|
|
2,830 |
|
|
1.35 |
% |
Noninterest bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
341,134 |
|
|
|
|
|
|
|
363,263 |
|
|
|
|
|
|
|
331,842 |
|
|
|
|
|
Accrued expenses and other liabilities |
|
22,277 |
|
|
|
|
|
|
|
13,013 |
|
|
|
|
|
|
|
10,920 |
|
|
|
|
|
Shareholders' equity |
|
143,206 |
|
|
|
|
|
|
|
138,961 |
|
|
|
|
|
|
|
116,184 |
|
|
|
|
|
Total liabilities and shareholders' equity |
$ |
1,389,850 |
|
|
|
|
|
$ |
1,364,721 |
|
|
|
|
|
$ |
1,308,729 |
|
|
|
|
Net interest income |
|
|
$ |
12,051 |
|
|
|
|
|
|
$ |
12,602 |
|
|
|
|
|
|
$ |
12,185 |
|
|
Net interest income/spread |
|
|
|
|
2.98 |
% |
|
|
|
|
|
3.14 |
% |
|
|
|
|
|
3.38 |
% |
Net interest margin |
|
|
|
|
3.63 |
% |
|
|
|
|
|
3.78 |
% |
|
|
|
|
|
3.84 |
% |
- Short-term investments consist of federal funds sold and
interest bearing deposits that we maintain at other financial
institutions.
- Stock consists of FHLB stock and Federal Reserve Bank of San
Francisco stock.
- Loans include the average balance of nonaccrual loans.
For more information
contact |
|
Curt Christianssen,
Chief Financial Officer, 714-438-2500 |
|
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