EX-99.1 2 pcber20181231.htm EXHIBIT 99.1 Exhibit


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Pacific City Financial Corporation Reports Earnings of $6.7 million for Q4 2018

Los Angeles, California - January 24, 2019 - Pacific City Financial Corporation (the “Company”) (NASDAQ: PCB), the holding company of Pacific City Bank (the “Bank”), today reported net income of $6.7 million, or $0.41 per diluted common share for the fourth quarter of 2018, compared with $6.5 million, or $0.44 per diluted common share, in the previous quarter and $2.3 million, or $0.17 per diluted common share, in the fourth quarter of 2017.

Q4 2018 Financial Highlights

•
Net income totaled $6.7 million or $0.41 per diluted common share;
•
Total assets were $1.70 billion at December 31, 2018, an increase of $33.2 million, or 2.0%, from $1.66 billion at September 30, 2018 and an increase of $255.0 million, or 17.7%, from $1.44 billion at December 31, 2017;
•
Loans held-for-investment, net of deferred costs (fees), were $1.34 billion at December 31, 2018, an increase of $29.6 million, or 2.3%, from $1.31 billion at September 30, 2018 and an increase of $148.7 million, or 12.5%, from $1.19 billion at December 31, 2017; and
•
Total deposits were $1.44 billion at December 31, 2018, an increase of $24.2 million, or 1.7%, from $1.42 billion at September 30, 2018, and an increase of $192.5 million, or 15.4%, from $1.25 billion at December 31, 2017.

“We are pleased to announce another strong quarter with record earnings of $6.7 million, and year-to-date increases of 12.5% for loans and 15.4% for deposits,” stated Henry Kim, President and Chief Executive Officer. “We expanded our net interest margin to 4.33% in the fourth quarter of 2018 compared with 4.17% in the third quarter of 2018 and maintained a strong efficiency ratio of 50.44%. We are confident in our ability to continue our high performance and increase the franchise and shareholders values.”



1


Financial Highlights
 
 
Three Months Ended
 
Year Ended
 
 
(Unaudited)
 
(Unaudited)
 
 
 
(Unaudited)
 
 
 
(Unaudited)
 
(Unaudited)
 
 
($ in thousands, except per share data)
 
12/31/2018
 
9/30/2018
 
% Change
 
12/31/2017
 
% Change
 
12/31/2018
 
12/31/2017
 
% Change
Net income
 
$
6,732

 
$
6,543

 
2.9
 %
 
$
2,339

 
187.8
 %
 
$
24,301

 
$
16,403

 
48.1
 %
Diluted earnings per common share
 
$
0.41

 
$
0.44

 
(6.8
)%
 
$
0.17

 
141.2
 %
 
$
1.66

 
$
1.21

 
37.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
$
17,856

 
$
16,716

 
6.8
 %
 
$
14,933

 
19.6
 %
 
$
65,748

 
$
55,170

 
19.2
 %
Provision for loan losses
 
294

 
417

 
(29.5
)%
 
1,713

 
(82.8
)%
 
1,231

 
1,827

 
(32.6
)%
Noninterest income
 
2,239

 
2,580

 
(13.2
)%
 
3,362

 
(33.4
)%
 
10,454

 
13,894

 
(24.8
)%
Noninterest expense
 
10,135

 
9,520

 
6.5
 %
 
9,620

 
5.4
 %
 
40,226

 
35,895

 
12.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (1)
 
1.60
%
 
1.60
%
 
 
 
0.65
%
 
 
 
1.53
%
 
1.22
%
 
 
Return on average shareholders’ equity (1), (2)
 
12.92
%
 
14.50
%
 
 
 
6.47
%
 
 
 
14.26
%
 
12.00
%
 
 
Net interest margin (1)
 
4.33
%
 
4.17
%
 
 
 
4.27
%
 
 
 
4.23
%
 
4.22
%
 
 
Efficiency ratio (3)
 
50.44
%
 
49.34
%
 
 
 
52.58
%
 
 
 
52.79
%
 
51.97
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
(Unaudited)
 
 
 
(Unaudited)
 
 
($ in thousands, except per share data)
 
12/31/2018
 
9/30/2018
 
% Change
 
12/31/2017
 
% Change
Total assets
 
$
1,697,028

 
$
1,663,787

 
2.0
%
 
$
1,441,999

 
17.7
%
Net loans held-for-investment
 
1,325,515

 
1,296,027

 
2.3
%
 
1,177,775

 
12.5
%
Total deposits
 
1,443,753

 
1,419,526

 
1.7
%
 
1,251,290

 
15.4
%
Book value per common share (2), (4)
 
$
13.16

 
$
12.71

 
3.6
%
 
$
10.60

 
24.2
%
Tier 1 leverage ratio (consolidated)
 
12.60
%
 
12.59
%
 
 
 
10.01
%
 
 
Total shareholders’ equity to total assets (2)
 
12.39
%
 
12.20
%
 
 
 
9.86
%
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Ratios are presented on an annualized basis.
(2)
The Company did not have any intangible equity components for the presented periods.
(3)
The ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.
(4)
The ratios are calculated by dividing total shareholders’ equity by the number of outstanding common shares.

Result of Operations

Net Interest Income and Net Interest Margin

Net interest income was $17.9 million for the three months ended December 31, 2018, an increase of $1.1 million, or 6.8%, from $16.7 million for the three months ended September 30, 2018, and an increase of $2.9 million, or 19.6%, from $14.9 million for the three months ended December 31, 2017. For the year ended December 31, 2018, net interest income was $65.7 million, an increase of $10.6 million, or 19.2%, from $55.2 million for the year ended December 31, 2017. These increases were primarily due to increases in average balance and average yield of interest-earning assets, partially offset by increases in average balance and average cost of interest-bearing liabilities.

Interest income on loans was $21.1 million for the three months ended December 31, 2018, an increase of $1.4 million, or 7.1%, from $19.7 million for the three months ended September 30, 2018, and an increase of $4.3 million, or 25.3%, from $16.8 million for the three months ended December 31, 2017. For the year ended December 31, 2018, interest income on loans was $76.8 million, an increase of $15.3 million, or 24.9%, from $61.5 million for the year ended December 31, 2017. The increases were primarily due to increases in both average balance and average yield of total loans (which includes both loans held-for-sale and loans held-for-investment, net of deferred cost (fees)). The increase in average yield on total loans was due to the Company’ s high proportion of variable rate loans that have repriced in the current rising interest rate environment.

Average balance of total loans was $1.32 billion for the three months ended December 31, 2018, compared with $1.28 billion for the three months ended September 30, 2018 and $1.19 billion for the three months ended December 31, 2017. Average yield was 6.34%, 6.10% and 5.63% for the three months ended December 31, 2018, September 30, 2018 and December 31, 2017, respectively. For the year ended December 31, 2018, average balance of and average yield on total loans were $1.26 billion and 6.08%, respectively, compared with $1.11 billion and 5.54%, respectively, for the year ended December 31, 2017.


2


The following table presents a composition of total loans by interest rate type accompanied with the weighted-average contractual rates as of the dates indicated:
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
 
12/31/2018
 
9/30/2018
 
12/31/2017
 
 
% to Total Loans
 
Weighted-Average Contractual Rate
 
% to Total Loans
 
Weighted-Average Contractual Rate
 
% to Total Loans
 
Weighted-Average Contractual Rate
Fixed rate loans
 
34.4
%
 
5.13
%
 
32.3
%
 
5.10
%
 
26.6
%
 
5.09
%
Variable rate loans
 
65.6
%
 
6.30
%
 
67.7
%
 
6.03
%
 
73.4
%
 
5.38
%
 
 
 
 
 
 
 
 
 
 
 
 
 

Interest income on investment securities was $1.1 million for the three months ended December 31, 2018, an increase of $145 thousand, or 15.6%, from $931 thousand for the three months ended September 30, 2018 and an increase of $304 thousand, or 39.4%, from $772 thousand for the three months ended December 31, 2017. For the year ended December 31, 2018, interest income on investment securities was $3.7 million, an increase of $1.1 million, or 42.5%, from $2.6 million for the year ended December 31, 2017. The increases were primarily due to increases in both average balance and average yield. The increase in average yield was due to additional purchases of investment securities in the current rising rate environment. Average balance of investment securities was $165.6 million for the three months ended December 31, 2018, compared with $154.0 million for the three months ended September 30, 2018 and $147.5 million for the three months ended December 31, 2017. Average yield was 2.58%, 2.40% and 2.08% for the three months ended December 31, 2018, September 30, 2018 and December 31, 2017, respectively. For the year ended December 31, 2018, average balance and average yield were $154.3 million and 2.41%, respectively, compared with $126.9 million and 2.06%, respectively, for the year ended December 31, 2017.

Total interest expense was $5.4 million for the three months ended December 31, 2018, an increase of $595 thousand, or 12.4%, from $4.8 million for the three months ended September 30, 2018 and an increase of $2.4 million, or 82.9%, compared with $2.9 million for the three months ended December 31, 2017. For the year ended December 31, 2018, total interest expense was $18.0 million, an increase of $7.9 million or 77.8%, from $10.1 million for the year ended December 31, 2017. The increases were primarily due to increases in average balance and average cost of interest-bearing liabilities. The increase in average cost was primarily due to the current rising interest rate environment and high competition in the Company’s deposit target markets.

Provision for Loan Losses

Provision for loan losses was $294 thousand for the three months ended December 31, 2018 compared with $417 thousand for the three months ended September 30, 2018 and $1.7 million for the three months ended December 31, 2017. For the year ended December 31, 2018, provision for loan losses was $1.2 million compared with $1.8 million for the year ended December 31, 2017. The Company has recognized additional provision for loan losses primarily due to an increase in the loans held-for-investment balance. During the three months ended December 31, 2018, the Company recorded a net charge-off of $223 thousand compared with a net recovery of $58 thousand for the three months ended September 30, 2018 and a net charge-off of $1.1 million for the three months ended December 31, 2017. For the years ended December 31, 2018 and 2017, net charge-off was $288 thousand and $923 thousand, respectively. Allowance for loan losses to total loans held-for-investment ratio was 0.98% at December 31, 2018, 1.00% at September 30, 2018, and 1.03% at December 31, 2017. The decrease in this ratio was primarily due to the decreases in historical loss rate and allowance for loan losses related to loans individually evaluated for impairment of $114 thousand.


3


Noninterest Income

The following table presents the components of noninterest income for the periods indicated:
 
 
Three Months Ended
 
Year Ended
 
 
(Unaudited)
 
(Unaudited)
 
 
 
(Unaudited)
 
 
 
(Unaudited)
 
(Unaudited)
 
 
($ in thousands)
 
12/31/2018
 
9/30/2018
 
% Change
 
12/31/2017
 
% Change
 
12/31/2018
 
12/31/2017
 
% Change
Gain on sale of SBA loans
 
$
1,059

 
$
1,306

 
(18.9
)%
 
$
2,109

 
(49.8
)%
 
$
5,278

 
$
8,869

 
(40.5
)%
Gain on sale of residential property loans
 
6

 
22

 
(72.7
)%
 
18

 
(66.7
)%
 
220

 
131

 
67.9
 %
Gain on sale of other loans
 
18

 
—

 
—
 %
 
—

 
—
 %
 
62

 
—

 
—
 %
Total gain on sale of loans
 
1,083

 
1,328

 
(18.4
)%
 
2,127

 
(49.1
)%
 
5,560

 
9,000

 
(38.2
)%
Service charges and fees on deposits
 
398

 
377

 
5.6
 %
 
357

 
11.5
 %
 
1,500

 
1,377

 
8.9
 %
Loan servicing income
 
371

 
578

 
(35.8
)%
 
605

 
(38.7
)%
 
2,160

 
2,446

 
(11.7
)%
Other income
 
387

 
297

 
30.3
 %
 
273

 
41.8
 %
 
1,234

 
1,071

 
15.2
 %
Total noninterest income
 
$
2,239

 
$
2,580

 
(13.2
)%
 
$
3,362

 
(33.4
)%
 
$
10,454

 
$
13,894

 
(24.8
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

The decreases in total noninterest income were primarily due to decreases in gain on sale of loans and loan servicing income, partially offset by increases in service charges and fees on deposits and other income.

The Company sold the guaranteed portion of SBA loans of $26.2 million, $23.1 million and $29.2 million, respectively, and residential property loans of $702 thousand, $2.2 million and $1.8 million, respectively, and other loans of $1.0 million, none and none, respectively, for the three months ended December 31, 2018, September 30, 2018 and December 31, 2017. For the years ended December 31, 2018 and 2017, the Company sold the guaranteed portion of SBA loans of $91.7 million and $127.3 million, respectively, residential property loans of $11.6 million and $12.4 million, respectively, and other loans of $2.1 million and none, respectively. The decrease in gain on sale of SBA loans was primarily due to decreases in sales volume and premium rates.

The decreases in loan servicing income were due to an increase in servicing asset amortization from a higher prepayment trend, partially offset by an increase in servicing fee income resulting from an increase in the average balance of loans being serviced. The increases in service charges and fees on deposits were primarily due to an increased transactions in deposits.

Noninterest Expense

The following table presents the components of noninterest expense for the periods indicated:
 
 
Three Months Ended
 
Year Ended
 
 
(Unaudited)
 
(Unaudited)
 
 
 
(Unaudited)
 
 
 
(Unaudited)
 
(Audited)
 
 
($ in thousands)
 
12/31/2018
 
9/30/2018
 
% Change
 
12/31/2017
 
% Change
 
12/31/2018
 
12/31/2017
 
% Change
Salaries and employee benefits
 
$
6,234

 
$
5,840

 
6.7
 %
 
$
6,140

 
1.5
 %
 
$
24,473

 
$
22,829

 
7.2
 %
Occupancy and equipment
 
1,358

 
1,244

 
9.2
 %
 
1,167

 
16.4
 %
 
4,992

 
4,426

 
12.8
 %
Professional fees
 
452

 
213

 
112.2
 %
 
501

 
(9.8
)%
 
2,176

 
1,842

 
18.1
 %
Marketing and business promotion
 
526

 
555

 
(5.2
)%
 
427

 
23.2
 %
 
2,010

 
1,647

 
22.0
 %
Data processing
 
309

 
314

 
(1.6
)%
 
288

 
7.3
 %
 
1,220

 
1,074

 
13.6
 %
Director fees and expenses
 
281

 
220

 
27.7
 %
 
216

 
30.1
 %
 
942

 
757

 
24.4
 %
Loan related expense
 
148

 
83

 
78.3
 %
 
136

 
8.8
 %
 
353

 
437

 
(19.2
)%
Regulatory assessments
 
75

 
192

 
(60.9
)%
 
114

 
(34.2
)%
 
544

 
423

 
28.6
 %
Other expenses
 
752

 
859

 
(12.5
)%
 
631

 
19.2
 %
 
3,516

 
2,460

 
42.9
 %
Total noninterest expense
 
$
10,135

 
$
9,520

 
6.5
 %
 
$
9,620

 
5.4
 %
 
$
40,226

 
$
35,895

 
12.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Overall, the increases in total noninterest expense were primarily due to growth in operations.

The increase in salaries and employee benefits compared with the three months ended September 30, 2018 was primarily due to increases in salaries and employee group insurance premiums, and prior quarter’s adjustments made to compensation related accruals of $486 thousand, partially offset by a decrease in vacation accruals. The increases in salaries and employee benefits compared with the three months and the year ended December 31, 2017 was primarily due to increases in salaries and employee group insurance premiums, partially offset by decreases in bonus accruals.


4


The increases in professional fees were primarily due to increased audit and other professional fees as the Company became a public company and additional expenses related to the listing of its shares of common stock on the Nasdaq Global Select Market during 2018.

The decreases in regulatory assessments compared with the three months ended September 30, 2018 and December 31, 2017 were primarily due to a decrease in assessment rate, partially offset by balance sheet growth. The increase in regulatory assessments compared with the year ended December 31, 2017 was primarily due to balance sheet growth, partially offset by a decrease in assessment rate.

The increase in other expenses compared with the year ended December 31, 2018 was primarily due to a one-time expense of $577 thousand for a reimbursement for a SBA loan guarantee previously paid by the SBA on a loan originated in 2007 that subsequently defaulted and was ultimately determined to be ineligible for the SBA guaranty.

Income Tax Provision

Effective income tax rate was 30.4% and 30.1%, respectively, for the three months and year ended December 31, 2018 compared with 66.4% and 47.7%, respectively, for the three months and year ended December 31, 2017. The decreases were primarily due to the enactment of H.R. 1, also known as the Tax Cuts and Jobs Act, on December 22, 2017. Beginning in 2018, H.R. 1 reduced the U.S. federal corporate tax rate from 35% to 21% and changed or limited certain tax deductions. The Company also revalued its deferred tax assets and liabilities and recorded additional deferred income tax expense of $1.6 million during the three months ended December 31, 2017.

Balance Sheet

Loans

The following table presents a composition of total loans by loan type as of the dates indicated:
 
 
(Unaudited)
 
(Unaudited)
 
 
 
(Unaudited)
 
 
($ in thousands)
 
12/31/2018
 
9/30/2018
 
% Change
 
12/31/2017
 
% Change
Real estate loans:
 
 
 
 
 
 
 
 
 
 
Commercial property
 
$
709,409

 
$
702,487

 
1.0
 %
 
$
662,031

 
7.2
 %
Residential property
 
233,816

 
214,960

 
8.8
 %
 
168,560

 
38.7
 %
SBA property
 
120,939

 
128,149

 
(5.6
)%
 
131,740

 
(8.2
)%
Construction
 
27,323

 
28,838

 
(5.3
)%
 
23,117

 
18.2
 %
Commercial and industrial loans:
 
 
 
 
 
 
 
 
 
 
Commercial term
 
102,133

 
96,017

 
6.4
 %
 
77,402

 
32.0
 %
Commercial lines of credit
 
80,473

 
72,234

 
11.4
 %
 
60,822

 
32.3
 %
SBA commercial term
 
27,147

 
28,493

 
(4.7
)%
 
30,376

 
(10.6
)%
Trade finance
 
11,521

 
10,357

 
11.2
 %
 
1,929

 
497.3
 %
Other consumer loans
 
25,921

 
27,589

 
(6.0
)%
 
34,022

 
(23.8
)%
Loans held-for-investment
 
1,338,682

 
1,309,124

 
2.3
 %
 
1,189,999

 
12.5
 %
Loans held-for-sale
 
5,781

 
12,957

 
(55.4
)%
 
5,297

 
9.1
 %
Total loans
 
$
1,344,463

 
$
1,322,081

 
1.7
 %
 
$
1,195,296

 
12.5
 %
 
 
 
 
 
 
 
 
 
 
 

The increase in loans held-for-investment for the three months ended December 31, 2018 was primarily due to new funding of $112.9 million and advances on lines of credit of $20.7 million, partially offset by pay-downs and pay-offs of $103.5 million, and charge-offs of $537 thousand. The increase in loans held-for-investment for the year ended December 31, 2018 was primarily due to new funding of $505.6 million and advances on lines of credit of $77.3 million, partially offset by pay-downs and pay-offs of $425.1 million and charge-offs of $1.0 million.

The decrease in loans held-for-sale for the three months ended December 31, 2018 was primarily due to sales of $27.9 million, partially offset by new funding of $21.4 million. The increase in loans held-for-sale for the year ended December 31, 2018 was primarily due to new funding of $99.9 million and loans transferred from loans held-for-investment of $8.1 million, partially offset by sales of $105.4 million.


5


Credit Quality

The following table presents compositions of non-performing loans and non-performing assets as of the dates indicated:
 
 
(Unaudited)
 
(Unaudited)
 
 
 
(Unaudited)
 
 
($ in thousands)
 
12/31/2018
 
9/30/2018
 
% Change
 
12/31/2017
 
% Change
Nonaccrual loans:
 
 
 
 
 
 
 
 
 
 
Commercial property
 
$
—

 
$
234

 
(100.0
)%
 
$
318

 
(100.0
)%
Residential property
 
302

 
—

 
—
 %
 
730

 
(58.6
)%
SBA property
 
540

 
970

 
(44.3
)%
 
1,810

 
(70.2
)%
Commercial term
 
—

 
—

 
—
 %
 
4

 
(100.0
)%
Commercial lines of credit
 
—

 
—

 
—
 %
 
10

 
(100.0
)%
SBA commercial term
 
203

 
254

 
(20.1
)%
 
338

 
(39.9
)%
Consumer loans
 
16

 
114

 
(86.0
)%
 
24

 
(33.3
)%
Total nonaccrual loans held-for-investment
 
1,061

 
1,572

 
(32.5
)%
 
3,234

 
(67.2
)%
Loans past due 90 days or more and still accruing
 
—

 
—

 
—
 %
 
—

 
—
 %
Non-performing loans
 
1,061

 
1,572

 
(32.5
)%
 
3,234

 
(67.2
)%
Other real estate owned
 
—

 
—

 
—
 %
 
99

 
(100.0
)%
Non-performing assets
 
$
1,061

 
$
1,572

 
(32.5
)%
 
$
3,333

 
(68.2
)%
Loans past due 30 to 59 days and accruing
 
$
368

 
$
337

 
9.2
 %
 
$
1,213

 
(69.7
)%
Loans past due 60 to 89 days and accruing
 
9

 
426

 
(97.9
)%
 
128

 
(93.0
)%
Loans past due 90 days or more and still accruing
 
—

 
—

 
—
 %
 
—

 
—
 %
Total loans past due and accruing
 
377

 
763

 
(50.6
)%
 
1,341

 
(71.9
)%
Loans modified as troubled debt restructurings (“TDRs”):
 
 
 
 
 
 
 
 
 
 
Accruing TDRs
 
$
432

 
$
467

 
(7.5
)%
 
$
592

 
(27.0
)%
Nonaccrual TDRs
 
131

 
458

 
(71.4
)%
 
1,675

 
(92.2
)%
Total TDRs
 
$
563

 
$
925

 
(39.1
)%
 
$
2,267

 
(75.2
)%
NPLs to total loans held-for-investment
 
0.08
%
 
0.12
%
 
 
 
0.27
%
 
 
NPAs to total assets
 
0.06
%
 
0.09
%
 
 
 
0.23
%
 
 
 
 
 
 
 
 
 
 
 
 
 

Classified Assets

Classified loans were $6.9 million at December 31, 2018, an increase of $630 thousand, or 10.1%, from $6.2 million at September 30, 2018, and an increase of $1.9 million, or 37.8%, from $5.0 million at December 31, 2017. Classified assets, which consist of classified loans and OREO, and the classified assets to total assets ratios were $6.9 million and 0.40%, respectively, at December 31, 2018, $6.2 million and 0.37%, respectively, at September 30, 2018, and $5.1 million and 0.35%, respectively, at December 31, 2017.

Investment Securities

Total investment securities were $168.8 million at December 31, 2018, an increase of $11.7 million, or 7.4%, from $157.1 million at September 30, 2018, and an increase of $18.0 million, or 11.9%, from $150.8 million at December 31, 2017. The increase for the three months ended December 31, 2018 was primarily due to purchases of $15.9 million, partially offset by principal pay-downs and calls of $6.0 million, net premium amortization of $184 thousand and a decrease in fair value of securities available-for-sale of $2.0 million. The increase for the year ended December 31, 2018 was primarily due to purchases of $44.0 million, partially offset by principal pay-downs and calls of $24.7 million, net premium amortization of $790 thousand and a decrease in fair value of securities available-for-sale of $595 thousand.


6


Deposits

The following table presents deposit mix as of the dates indicated:
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
 
12/31/2018
 
9/30/2018
 
12/31/2017
($ in thousands)
 
Amount
 
% to Total
 
Amount
 
% to Total
 
Amount
 
% to Total
Noninterest-bearing demand deposits
 
$
329,279

 
22.8
%
 
$
350,346

 
24.7
%
 
$
319,026

 
25.5
%
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
 
NOW
 
24,683

 
1.7
%
 
11,638

 
0.8
%
 
10,324

 
0.8
%
Money market accounts
 
280,724

 
19.4
%
 
263,704

 
18.6
%
 
299,390

 
23.9
%
Savings
 
8,194

 
0.6
%
 
8,417

 
0.6
%
 
8,164

 
0.7
%
Time deposits of $250,000 or less
 
477,134

 
33.0
%
 
476,370

 
26.9
%
 
332,024

 
23.6
%
Time deposits of more than $250,000
 
181,239

 
12.6
%
 
161,551

 
18.0
%
 
129,862

 
13.3
%
State and brokered time deposits
 
142,500

 
9.9
%
 
147,500

 
10.4
%
 
152,500

 
12.2
%
Total interest-bearing deposits
 
1,114,474

 
77.2
%
 
1,069,180

 
75.3
%
 
932,264

 
74.5
%
Total deposits
 
$
1,443,753

 
100.0
%
 
$
1,419,526

 
100.0
%
 
$
1,251,290

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 

The increase for the three months ended December 31, 2018 was primarily due to new accounts of $127.6 million, partially offset by closed accounts of $66.4 million and net balance decreases of $37.0 million. The increase for the year ended December 31, 2018 was primarily due to new accounts of $633.0 million, partially offset by closed accounts of $322.2 million and net balance decreases of $118.3 million.

Borrowings

Federal Home Loan Bank (“FHLB”) advances were $30.0 million at December 31, 2018 and September 30, 2018, and $40.0 million at December 31, 2017. At December 31, 2018, borrowings from FHLB bore fixed interest rates with original maturity terms ranging from two to five years.

Shareholders’ Equity

Shareholders’ equity was $210.3 million at December 31, 2018, an increase of $7.4 million, or 3.6%, from $202.9 million at September 30, 2018, and an increase of $68.1 million, or 47.9%, from $142.2 million at December 31, 2017. The increase for the three months ended December 31, 2018 was primarily due to retention of earnings, partially offset by cash dividends paid on common stock. The increase for the year ended December 31, 2018 was primarily due to the net proceeds of $45.0 million from the completion of the Company’s underwritten initial public offering and the exercise of the underwriters’ 30-day option, which resulted in an issuance of 2,508,234 shares of the Company’s common stock, as well as retention of earnings, partially offset by cash dividends paid on common stock.

Capital Ratios

The following table presents capital ratios for the Company and the Bank as of dates indicated:
 
 
(Unaudited)
 
(Unaudited)
 
(Audited)
 
 
12/31/2018
 
9/30/2018
 
12/31/2017
Pacific City Financial Corporation
 
 
 
 
 
 
Common tier 1 capital (to risk-weighted assets)
 
16.28
%
 
16.08
%
 
12.15
%
Total capital (to risk-weighted assets)
 
17.31
%
 
17.12
%
 
13.20
%
Tier 1 capital (to risk-weighted assets)
 
16.28
%
 
16.08
%
 
12.15
%
Tier 1 capital (to average assets)
 
12.60
%
 
12.59
%
 
10.01
%
Pacific City Bank
 
 
 
 
 
 
Common tier 1 capital (to risk-weighted assets)
 
16.19
%
 
15.89
%
 
12.06
%
Total capital (to risk-weighted assets)
 
17.21
%
 
16.93
%
 
13.12
%
Tier 1 capital (to risk-weighted assets)
 
16.19
%
 
15.89
%
 
12.06
%
Tier 1 capital (to average assets)
 
12.53
%
 
12.45
%
 
9.94
%
 
 
 
 
 
 
 


7


About Pacific City Financial Corporation

Pacific City Financial Corporation is the bank holding company for Pacific City Bank, a California state chartered bank, offering a full suite of commercial banking services to small to medium-sized businesses, individuals and professionals, primarily in Southern California, and predominantly in Korean-American and other minority communities.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as ‘‘may,’’ “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “intend,” “plan,” or words or phases of similar meaning. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. These and other important factors are detailed in various securities law filings made periodically by the Company, copies of which are available from the Company without charge. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements. Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise, except as required by law.
Contact:
Timothy Chang
Executive Vice President & Chief Financial Officer
213-210-2000

8


Pacific City Financial Corporation and Subsidiary
Consolidated Balance Sheets
($ in thousands, except share and per share data)
 
 
(Unaudited)
 
(Unaudited)
 
 
 
(Unaudited)
 
 
 
 
12/31/2018
 
9/30/2018
 
% Change
 
12/31/2017
 
% Change
Assets
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
 
$
24,121

 
$
27,532

 
(12.4
)%
 
$
16,662

 
44.8
 %
Interest-bearing deposits in financial institutions
 
138,152

 
136,524

 
1.2
 %
 
56,996

 
142.4
 %
Total cash and cash equivalents
 
162,273

 
164,056

 
(1.1
)%
 
73,658

 
120.3
 %
Securities available-for-sale, at fair value
 
146,991

 
135,089

 
8.8
 %
 
129,689

 
13.3
 %
Securities held-to-maturity
 
21,760

 
21,991

 
(1.1
)%
 
21,070

 
3.3
 %
Total investment securities
 
168,751

 
157,080

 
7.4
 %
 
150,759

 
11.9
 %
Loans held-for-sale
 
5,781

 
12,957

 
(55.4
)%
 
5,297

 
9.1
 %
Loans held-for-investment, net of deferred loan costs (fees)
 
1,338,682

 
1,309,124

 
2.3
 %
 
1,189,999

 
12.5
 %
Allowance for loan losses
 
(13,167
)
 
(13,097
)
 
0.5
 %
 
(12,224
)
 
7.7
 %
Net loans held-for-investments
 
1,325,515

 
1,296,027

 
2.3
 %
 
1,177,775

 
12.5
 %
Premises and equipment, net
 
4,588

 
4,615

 
(0.6
)%
 
4,723

 
(2.9
)%
Federal Home Loan Bank and other bank stock
 
7,433

 
7,433

 
—
 %
 
6,589

 
12.8
 %
Other real estate owned, net
 
—

 
—

 
—
 %
 
99

 
(100.0
)%
Deferred tax assets, net
 
3,377

 
4,209

 
(19.8
)%
 
3,847

 
(12.2
)%
Servicing assets
 
7,666

 
8,114

 
(5.5
)%
 
8,973

 
(14.6
)%
Accrued interest receivable and other assets
 
11,644

 
9,296

 
25.3
 %
 
10,279

 
13.3
 %
Total assets
 
$
1,697,028

 
$
1,663,787

 
2.0
 %
 
$
1,441,999

 
17.7
 %
Liabilities
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing demand
 
$
329,279

 
$
350,346

 
(6.0
)%
 
$
319,026

 
3.2
 %
Savings, NOW and money market accounts
 
313,601

 
283,759

 
10.5
 %
 
317,878

 
(1.3
)%
Time deposits of $250,000 or less
 
519,634

 
523,870

 
(0.8
)%
 
384,524

 
35.1
 %
Time deposits of more than $250,000
 
281,239

 
261,551

 
7.5
 %
 
229,862

 
22.4
 %
Total deposits
 
1,443,753

 
1,419,526

 
1.7
 %
 
1,251,290

 
15.4
 %
Federal Home Loan Bank advances
 
30,000

 
30,000

 
—
 %
 
40,000

 
(25.0
)%
Accrued interest payable and other liabilities
 
12,979

 
11,323

 
14.6
 %
 
8,525

 
52.2
 %
Total liabilities
 
1,486,732

 
1,460,849

 
1.8
 %
 
1,299,815

 
14.4
 %
Commitments and contingent liabilities
 
 
 
 
 
 
 
 
 
 
Shareholders’ equity
 
 
 
 
 
 
 
 
 
 
Common stock
 
171,067

 
171,495

 
(0.2
)%
 
125,430

 
36.4
 %
Additional paid-in capital
 
3,299

 
3,158

 
4.5
 %
 
2,941

 
12.2
 %
Retained earnings
 
37,577

 
31,325

 
20.0
 %
 
15,036

 
149.9
 %
Accumulated other comprehensive loss, net
 
(1,647
)
 
(3,040
)
 
(45.8
)%
 
(1,223
)
 
34.7
 %
Total shareholders’ equity
 
210,296

 
202,938

 
3.6
 %
 
142,184

 
47.9
 %
Total liabilities and shareholders’ equity
 
$
1,697,028

 
$
1,663,787

 
2.0
 %
 
$
1,441,999

 
17.7
 %
 
 
 
 
 
 
 
 
 
 
 
Outstanding common share
 
15,977,754

 
15,972,914

 
 
 
13,417,899

 
 
Book value per common share (1)
 
$
13.16

 
$
12.71

 
 
 
$
10.60

 
 
Total loan to total deposit ratio
 
93.12
%
 
93.14
%
 
 
 
95.53
%
 
 
Noninterest-bearing deposits to total deposits
 
22.81
%
 
24.68
%
 
 
 
25.50
%
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
The ratios are calculated by dividing total shareholders’ equity by the number of outstanding common shares. The Company did not have any intangible equity components for the presented periods.

9


Pacific City Financial Corporation and Subsidiary
Consolidated Statements of Income
($ in thousands, except share and per share data)
 
Three Months Ended
 
Year Ended
 
(Unaudited)
 
(Unaudited)
 
 
 
(Unaudited)
 
 
 
(Unaudited)
 
(Unaudited)
 
 
 
12/31/2018
 
9/30/2018
 
% Change
 
12/31/2017
 
% Change
 
12/31/2018
 
12/31/2017
 
% Change
Interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest and fees on loans
$
21,088

 
$
19,699

 
7.1
 %
 
$
16,832

 
25.3
 %
 
$
76,837

 
$
61,516

 
24.9
 %
Interest on investment securities
1,076

 
931

 
15.6
 %
 
772

 
39.4
 %
 
3,724

 
2,614

 
42.5
 %
Interest and dividend on other interest-earning assets
1,067

 
866

 
23.2
 %
 
267

 
299.6
 %
 
3,138

 
1,137

 
176.0
 %
Total interest income
23,231

 
21,496

 
8.1
 %
 
17,871

 
30.0
 %
 
83,699

 
65,267

 
28.2
 %
Interest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest on deposits
5,239

 
4,643

 
12.8
 %
 
2,766

 
89.4
 %
 
17,340

 
9,749

 
77.9
 %
Interest on other borrowings
136

 
137

 
(0.7
)%
 
172

 
(20.9
)%
 
611

 
348

 
75.6
 %
Total interest expense
5,375

 
4,780

 
12.4
 %
 
2,938

 
82.9
 %
 
17,951

 
10,097

 
77.8
 %
Net interest income
17,856

 
16,716

 
6.8
 %
 
14,933

 
19.6
 %
 
65,748

 
55,170

 
19.2
 %
Provision for loan losses
294

 
417

 
(29.5
)%
 
1,713

 
(82.8
)%
 
1,231

 
1,827

 
(32.6
)%
Net interest income after provision for loan losses
17,562

 
16,299

 
7.7
 %
 
13,220

 
32.8
 %
 
64,517

 
53,343

 
20.9
 %
Noninterest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on sale of SBA loans
1,059

 
1,306

 
(18.9
)%
 
2,109

 
(49.8
)%
 
5,278

 
8,869

 
(40.5
)%
Gain on sale of residential property loans
6

 
22

 
(72.7
)%
 
18

 
(66.7
)%
 
220

 
131

 
67.9
 %
Gain on sale of other loans
18

 
—

 
—
 %
 
—

 
—
 %
 
62

 
—

 
—
 %
Service charges and fees on deposits
398

 
377

 
5.6
 %
 
357

 
11.5
 %
 
1,500

 
1,377

 
8.9
 %
Servicing income
371

 
578

 
(35.8
)%
 
605

 
(38.7
)%
 
2,160

 
2,446

 
(11.7
)%
Other income
387

 
297

 
30.3
 %
 
273

 
41.8
 %
 
1,234

 
1,071

 
15.2
 %
Total noninterest income
2,239

 
2,580

 
(13.2
)%
 
3,362

 
(33.4
)%
 
10,454

 
13,894

 
(24.8
)%
Noninterest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
6,234

 
5,840

 
6.7
 %
 
6,140

 
1.5
 %
 
24,473

 
22,829

 
7.2
 %
Occupancy and equipment
1,358

 
1,244

 
9.2
 %
 
1,167

 
16.4
 %
 
4,992

 
4,426

 
12.8
 %
Professional fees
452

 
213

 
112.2
 %
 
501

 
(9.8
)%
 
2,176

 
1,842

 
18.1
 %
Marketing and business promotion
526

 
555

 
(5.2
)%
 
427

 
23.2
 %
 
2,010

 
1,647

 
22.0
 %
Data processing
309

 
314

 
(1.6
)%
 
288

 
7.3
 %
 
1,220

 
1,074

 
13.6
 %
Director fees and expenses
281

 
220

 
27.7
 %
 
216

 
30.1
 %
 
942

 
757

 
24.4
 %
Loan related expense
148

 
83

 
78.3
 %
 
136

 
8.8
 %
 
353

 
437

 
(19.2
)%
Regulatory assessments
75

 
192

 
(60.9
)%
 
114

 
(34.2
)%
 
544

 
423

 
28.6
 %
Other expenses
752

 
859

 
(12.5
)%
 
631

 
19.2
 %
 
3,516

 
2,460

 
42.9
 %
Total noninterest expense
10,135

 
9,520

 
6.5
 %
 
9,620

 
5.4
 %
 
40,226

 
35,895

 
12.1
 %
Income before income taxes
9,666

 
9,359

 
3.3
 %
 
6,962

 
38.8
 %
 
34,745

 
31,342

 
10.9
 %
Income tax expense
2,934

 
2,816

 
4.2
 %
 
4,623

 
(36.5
)%
 
10,444

 
14,939

 
(30.1
)%
Net income
$
6,732

 
$
6,543

 
2.9
 %
 
$
2,339

 
187.8
 %
 
$
24,301

 
$
16,403

 
48.1
 %
Earnings per common share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.42

 
$
0.44

 
 
 
$
0.17

 
 
 
$
1.69

 
$
1.22

 
 
Diluted
$
0.41

 
$
0.44

 
 
 
$
0.17

 
 
 
$
1.66

 
$
1.21

 
 
Average common shares outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
15,975,387

 
14,730,120

 
 
 
13,415,795

 
 
 
14,397,075

 
13,408,030

 
 
Diluted
16,244,837

 
14,924,546

 
 
 
13,569,503

 
 
 
14,669,379

 
13,540,293

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividend paid per common share
$
0.03

 
$
0.03

 
 
 
$
0.03

 
 
 
$
0.12

 
$
0.12

 
 
Return on average assets (1)
1.60
%
 
1.60
%
 
 
 
0.65
%
 
 
 
1.53
%
 
1.22
%
 
 
Return on average shareholders’ equity (1), (2)
12.92
%
 
14.50
%
 
 
 
6.47
%
 
 
 
14.26
%
 
12.00
%
 
 
Efficiency ratio (3)
50.44
%
 
49.34
%
 
 
 
52.58
%
 
 
 
52.79
%
 
51.97
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Ratios are presented on an annualized basis.
(2)
The Company did not have any intangible equity components for the presented periods.
(3)
The ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.


10


Pacific City Financial Corporation and Subsidiary
Average Balance, Average Yield, and Average Rate
($ in thousands)
 
 
Three Months Ended
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
 
12/31/2018
 
9/30/2018
 
12/31/2017
 
 
Average Balance
 
Interest Income/ Expense
 
Avg. Yield/Rate
 
Average Balance
 
Interest Income/ Expense
 
Avg. Yield/Rate
 
Average Balance
 
Interest Income/ Expense
 
Avg. Yield/Rate
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans (1)
 
$
1,319,403

 
$
21,088

 
6.34
%
 
$
1,280,352

 
$
19,699

 
6.10
%
 
$
1,185,966

 
$
16,832

 
5.63
%
U.S. government agency securities
 
23,029

 
144

 
2.48
%
 
24,102

 
154

 
2.53
%
 
25,333

 
144

 
2.26
%
Mortgage-backed securities
 
80,967

 
534

 
2.62
%
 
69,592

 
414

 
2.36
%
 
66,594

 
333

 
1.98
%
Collateralized mortgage obligation
 
55,666

 
359

 
2.56
%
 
54,094

 
324

 
2.38
%
 
47,878

 
251

 
2.08
%
Municipal bonds (2)
 
5,892

 
39

 
2.63
%
 
6,232

 
39

 
2.48
%
 
7,666

 
44

 
2.28
%
Other interest-earning assets
 
152,894

 
1,067

 
2.77
%
 
156,831

 
866

 
2.19
%
 
53,872

 
267

 
1.97
%
Total interest-earning assets
 
1,637,851

 
23,231

 
5.63
%
 
1,591,203

 
21,496

 
5.36
%
 
1,387,309

 
17,871

 
5.11
%
Noninterest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
18,882

 
 
 
 
 
18,596

 
 
 
 
 
17,440

 
 
 
 
Allowance for loan losses
 
(12,935
)
 
 
 
 
 
(12,774
)
 
 
 
 
 
(11,665
)
 
 
 
 
Other assets
 
25,972

 
 
 
 
 
26,828

 
 
 
 
 
28,891

 
 
 
 
Total noninterest-earning assets
 
31,919

 
 
 
 
 
32,650

 
 
 
 
 
34,666

 
 
 
 
Total assets
 
$
1,669,770

 
 
 
 
 
$
1,623,853

 
 
 
 
 
$
1,421,975

 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOW and money market accounts
 
$
301,700

 
1,110

 
1.46
%
 
$
269,514

 
834

 
1.23
%
 
$
314,237

 
813

 
1.03
%
Savings
 
8,364

 
8

 
0.38
%
 
8,717

 
6

 
0.27
%
 
8,870

 
7

 
0.31
%
Time deposits
 
790,453

 
4,121

 
2.07
%
 
795,202

 
3,803

 
1.90
%
 
585,163

 
1,946

 
1.32
%
Total interest-bearing deposits
 
1,100,517

 
5,239

 
1.89
%
 
1,073,433

 
4,643

 
1.72
%
 
908,270

 
2,766

 
1.21
%
Borrowings from Federal Home Loan Bank
 
30,000

 
136

 
1.80
%
 
30,000

 
137

 
1.81
%
 
40,000

 
172

 
1.71
%
Total interest-bearing liabilities
 
1,130,517

 
5,375

 
1.89
%
 
1,103,433

 
4,780

 
1.72
%
 
948,270

 
2,938

 
1.23
%
Noninterest-bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing demand
 
320,232

 
 
 
 
 
330,021

 
 
 
 
 
320,174

 
 
 
 
Other liabilities
 
12,281

 
 
 
 
 
11,325

 
 
 
 
 
10,133

 
 
 
 
Total noninterest-bearing liabilities
 
332,513

 
 
 
 
 
341,346

 
 
 
 
 
330,307

 
 
 
 
Total liabilities
 
1,463,030

 
 
 
 
 
1,444,779

 
 
 
 
 
1,278,577

 
 
 
 
Total shareholders’ equity
 
206,740

 
 
 
 
 
179,074

 
 
 
 
 
143,398

 
 
 
 
Total liabilities and shareholders’ equity
 
$
1,669,770

 
 
 
 
 
$
1,623,853

 
 
 
 
 
$
1,421,975

 
 
 
 
Net interest income
 
 
 
$
17,856

 
 
 
 
 
$
16,716

 
 
 
 
 
$
14,933

 
 
Net interest spread (3)
 
 
 
 
 
3.74
%
 
 
 
 
 
3.64
%
 
 
 
 
 
3.88
%
Net interest margin (4)
 
 
 
 
 
4.33
%
 
 
 
 
 
4.17
%
 
 
 
 
 
4.27
%
Total deposits
 
$
1,420,749

 
$
5,239

 
1.46
%
 
$
1,403,454

 
$
4,643

 
1.31
%
 
$
1,228,444

 
$
2,766

 
0.89
%
Total funding (5)
 
$
1,450,749

 
$
5,375

 
1.47
%
 
$
1,433,454

 
$
4,780

 
1.32
%
 
$
1,268,444

 
$
2,938

 
0.92
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Total loans include both loans held-for-sale and loans held-for-investment, net of deferred loan costs (fees).
(2)
The yield on municipal bonds has not been computed on a tax-equivalent basis.
(3)
Net interest spread is calculated by subtracting average rate on interest-bearing liabilities from average yield on interest-earning assets.
(4)
Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.
(5)
Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

11


Pacific City Financial Corporation and Subsidiary
Average Balance, Average Yield, and Average Rate (Continued)
($ in thousands)
 
 
Year Ended
 
 
(Unaudited)
 
(Unaudited)
 
 
12/31/2018
 
12/31/2017
 
 
Average Balance
 
Interest Income/ Expense
 
Avg. Yield/Rate
 
Average Balance
 
Interest Income/ Expense
 
Avg. Yield/Rate
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
Total loans (1)
 
$
1,264,166

 
$
76,837

 
6.08
%
 
$
1,111,248

 
$
61,516

 
5.54
%
U.S. government agency securities
 
23,671

 
576

 
2.43
%
 
24,762

 
571

 
2.31
%
Mortgage-backed securities
 
70,971

 
1,717

 
2.42
%
 
57,171

 
1,111

 
1.94
%
Collateralized mortgage obligation
 
53,312

 
1,272

 
2.39
%
 
36,660

 
746

 
2.03
%
Municipal bonds (2)
 
6,312

 
159

 
2.52
%
 
8,319

 
186

 
2.24
%
Other interest-earning assets
 
137,627

 
3,138

 
2.28
%
 
68,637

 
1,137

 
1.66
%
Total interest-earning assets
 
1,556,059

 
83,699

 
5.38
%
 
1,306,797

 
65,267

 
4.99
%
Noninterest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
19,079

 
 
 
 
 
16,973

 
 
 
 
Allowance for loan losses
 
(12,632
)
 
 
 
 
 
(11,435
)
 
 
 
 
Other assets
 
26,827

 
 
 
 
 
27,793

 
 
 
 
Total noninterest-earning assets
 
33,274

 
 
 
 
 
33,331

 
 
 
 
Total assets
 
$
1,589,333

 
 
 
 
 
$
1,340,128

 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
NOW and money market accounts
 
$
287,131

 
3,477

 
1.21
%
 
$
320,701

 
3,244

 
1.01
%
Savings
 
8,613

 
26

 
0.30
%
 
8,873

 
25

 
0.28
%
Time deposits
 
758,029

 
13,837

 
1.83
%
 
539,068

 
6,480

 
1.20
%
Total interest-bearing deposits
 
1,053,773

 
17,340

 
1.65
%
 
868,642

 
9,749

 
1.12
%
Borrowings from Federal Home Loan Bank
 
34,904

 
611

 
1.75
%
 
20,384

 
348

 
1.71
%
Total interest-bearing liabilities
 
1,088,677

 
17,951

 
1.65
%
 
889,026

 
10,097

 
1.14
%
Noninterest-bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing demand
 
319,832

 
 
 
 
 
305,354

 
 
 
 
Other liabilities
 
10,395

 
 
 
 
 
9,026

 
 
 
 
Total noninterest-bearing liabilities
 
330,227

 
 
 
 
 
314,380

 
 
 
 
Total liabilities
 
1,418,904

 
 
 
 
 
1,203,406

 
 
 
 
Total shareholders’ equity
 
170,429

 
 
 
 
 
136,722

 
 
 
 
Total liabilities and shareholders’ equity
 
$
1,589,333

 
 
 
 
 
$
1,340,128

 
 
 
 
Net interest income
 
 
 
$
65,748

 
 
 
 
 
$
55,170

 
 
Net interest spread (3)
 
 
 
 
 
3.73
%
 
 
 
 
 
3.85
%
Net interest margin (4)
 
 
 
 
 
4.23
%
 
 
 
 
 
4.22
%
Total deposits
 
$
1,373,605

 
$
17,340

 
1.26
%
 
$
1,173,996

 
$
9,749

 
0.83
%
Total funding (5)
 
$
1,408,509

 
$
17,951

 
1.27
%
 
$
1,194,380

 
$
10,097

 
0.85
%
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Total loans include both loans held-for-sale and loans held-for-investment, net of deferred loan costs (fees).
(2)
The yield on municipal bonds has not been computed on a tax-equivalent basis.
(3)
Net interest spread is calculated by subtracting average rate on interest-bearing liabilities from average yield on interest-earning assets.
(4)
Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets.
(5)
Total funding is the sum of interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.


12