Pacific City Financial Corporation (the "Company") 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 $6.7 million, and year-to-date increases of 12.5% for loans and 15.4% for deposits," stated Henry Kim, President and Chief Executive Officer. "We expanded our net interest margin to 4.33% in the fourth quarter of 2018 compared with 4.17% in the third quarter of 2018 and maintained a strong efficiency ratio of 50.44%. We are confident in our ability to continue our high performance and increase the franchise and shareholders values."
Financial Highlights
 |  |  | Three Months Ended |  |  | Year Ended | ||||||||||||||||||||||||||||||||
(Unaudited) | Â | Â | (Unaudited) | Â | Â | Â | Â | (Unaudited) | Â | Â | (Unaudited) | Â | Â | (Unaudited) | Â | Â | ||||||||||||||||||||||
($ 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 | % | ||||||||||||||||||||||
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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 | % | |||||||||||||||||||||||||||
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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 | % | ||||||||||||||||||||||||||||
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 |  |  |  |  |  |  | (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 | % | ||||||||||||||||||||||
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(1) |
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Ratios are presented on an annualized basis. |
(2) |
The Company did not have any intangible equity components for the presented periods. |
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(3) |
The ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income. |
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(4) |
The ratios are calculated by dividing total shareholders' equity by the number of outstanding common shares. |
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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.
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 |
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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 | % | ||||||||||||||||||
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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 $114 thousand.
Noninterest Income
The following table presents the components of noninterest income for the periods indicated:
 |  |  | Three Months Ended |  |  | Year Ended | ||||||||||||||||||||||||||||||||
(Unaudited) | Â | Â | (Unaudited) | Â | Â | Â | Â | (Unaudited) | Â | Â | (Unaudited) | Â | Â | (Unaudited) | Â | Â | ||||||||||||||||||||||
($ 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 | Â | 297 | Â | 30.3 | % | 273 | Â | 41.8 | % | 1,234 | Â | 1,071 | Â | 15.2 | % | ||||||||||||||||||||||
Total noninterest income | $ | 2,239 | Â | $ | 2,580 | Â | (13.2 | )% | $ | 3,362 | Â | (33.4 | )% | $ | 10,454 | Â | $ | 13,894 | Â | (24.8 | )% | |||||||||||||||||
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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 $2.1 million and none, respectively. The decrease in gain on sale of SBA loans was primarily due to decreases in sales volume and premium rates.
The decreases in loan servicing income were due to an increase in servicing asset amortization from a higher prepayment trend, partially offset by an increase in servicing fee income resulting from an increase in the average balance of loans being serviced. The increases in service charges and fees on deposits were primarily due to an increased transactions in deposits.
Noninterest Expense
The following table presents the components of noninterest expense for the periods indicated:
 |  |  | Three Months Ended |  |  | Year Ended | ||||||||||||||||||||||||||||||||
(Unaudited) | Â | Â | (Unaudited) | Â | Â | Â | Â |
(Unaudited) |
 |  | (Unaudited) |  |  |
(Audited) |
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($ 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 | Â | 859 | Â | (12.5 | )% | 631 | Â | 19.2 | % | 3,516 | Â | 2,460 | Â | 42.9 | % | ||||||||||||||||||||||
Total noninterest expense | $ | 10,135 | Â | $ | 9,520 | Â | 6.5 | % | $ | 9,620 | Â | 5.4 | % | $ | 40,226 | Â | $ | 35,895 | Â | 12.1 | % | |||||||||||||||||
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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.
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 | Â | 27,589 | Â | (6.0 | )% | 34,022 | Â | (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 | Â | 12,957 | Â | (55.4 | )% | 5,297 | Â | 9.1 | % | ||||||||||||||||||
Total loans | $ | 1,344,463 | Â | $ | 1,322,081 | Â | 1.7 | % | $ | 1,195,296 | Â | 12.5 | % | |||||||||||||||
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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 $105.4 million.
Credit Quality
The following table presents compositions of non-performing loans and non-performing assets as of the dates indicated:
 |  |  | (Unaudited) |  |  |  | (Unaudited) |  |  |  |  |  |  | (Unaudited) |  |  |  | |||||||||||
($ 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 | Â | 114 | Â | (86.0 | )% | 24 | Â | (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 | Â | $ | 1,572 | Â | (32.5 | )% | $ | 3,333 | Â | (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 | Â | 763 | Â | (50.6 | )% | 1,341 | Â | (71.9 | )% | ||||||||||||||||||
Loans modified as troubled debt restructurings ("TDRs"): | ||||||||||||||||||||||||||||
Accruing TDRs | $ | 432 | $ | 467 | (7.5 | )% | $ | 592 | (27.0 | )% | ||||||||||||||||||
Nonaccrual TDRs | 131 | Â | 458 | Â | (71.4 | )% | 1,675 | Â | (92.2 | )% | ||||||||||||||||||
Total TDRs | $ | 563 | Â | $ | 925 | Â | (39.1 | )% | $ | 2,267 | Â | (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 | % | ||||||||||||||||||||||
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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 $595 thousand.
Deposits
The following table presents deposit mix as of the dates indicated:
 |  |  | (Unaudited) |  |  |  | (Unaudited) |  |  |  | (Unaudited) | ||||||||||||||||||||||
12/31/2018 | 9/30/2018 | 12/31/2017 | |||||||||||||||||||||||||||||||
($ in thousands) | Amount | Â | Â | Â | % to Total | Amount | Â | Â | Â | % to Total | Amount | Â | Â | Â | % 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 | Â | 9.9 | % | 147,500 | Â | 10.4 | % | 152,500 | Â | 12.2 | % | |||||||||||||||||||||
Total interest-bearing deposits | 1,114,474 | Â | 77.2 | % | 1,069,180 | Â | 75.3 | % | 932,264 | Â | 74.5 | % | |||||||||||||||||||||
Total deposits | $ | 1,443,753 | Â | 100.0 | % | $ | 1,419,526 | Â | 100.0 | % | $ | 1,251,290 | Â | 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) |
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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 | % | |||||||||||||
 |
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.
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Pacific City Financial Corporation and Subsidiary Consolidated Balance Sheets ($ in thousands, except share and per share data) |
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 | ||||||||||||||||||||||||||||
(Unaudited) | (Unaudited) |
(Unaudited) |
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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 | Â | 136,524 | Â | 1.2 | % | 56,996 | Â | 142.4 | % | ||||||||||||||||||
Total cash and cash equivalents | 162,273 | Â | 164,056 | Â | (1.1 | )% | 73,658 | Â | 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 | Â | 21,991 | Â | (1.1 | )% | 21,070 | Â | 3.3 | % | ||||||||||||||||||
Total investment securities | 168,751 | Â | 157,080 | Â | 7.4 | % | 150,759 | Â | 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 | Â | 1,296,027 | Â | 2.3 | % | 1,177,775 | Â | 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 | Â | 9,296 | Â | 25.3 | % | 10,279 | Â | 13.3 | % | ||||||||||||||||||
Total assets | $ | 1,697,028 | Â | $ | 1,663,787 | Â | 2.0 | % | $ | 1,441,999 | Â | 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 | Â | 261,551 | Â | 7.5 | % | 229,862 | Â | 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 | Â | 11,323 | Â | 14.6 | % | 8,525 | Â | 52.2 | % | ||||||||||||||||||
Total liabilities | 1,486,732 | Â | 1,460,849 | Â | 1.8 | % | 1,299,815 | Â | 14.4 | % | ||||||||||||||||||
Commitments and contingent liabilities | ||||||||||||||||||||||||||||
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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 | Â | 202,938 | Â | 3.6 | % | 142,184 | Â | 47.9 | % | ||||||||||||||||||
Total liabilities and shareholders' equity | $ | 1,697,028 | Â | $ | 1,663,787 | Â | 2.0 | % | $ | 1,441,999 | Â | 17.7 | % | |||||||||||||||
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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 | % | ||||||||||||||||||||||
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(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. |
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Pacific City Financial Corporation and Subsidiary Consolidated Statements of Income ($ in thousands, except share and per share data) |
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Three Months Ended | Year Ended | |||||||||||||||||||||||||||||||||||||
(Unaudited) | Â | Â | (Unaudited) | Â | Â | Â | Â | (Unaudited) | Â | Â | (Unaudited) | Â | Â | (Unaudited) | Â | Â | ||||||||||||||||||||||
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 | Â | 866 | Â | 23.2 | % | 267 | Â | 299.6 | % | 3,138 | Â | 1,137 | Â | 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 | Â | 137 | Â | (0.7 | )% | 172 | Â | (20.9 | )% | 611 | Â | 348 | Â | 75.6 | % | ||||||||||||||||||||||
Total interest expense | 5,375 | Â | 4,780 | Â | 12.4 | % | 2,938 | Â | 82.9 | % | 17,951 | Â | 10,097 | Â | 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 | Â | 417 | Â | (29.5 | )% | 1,713 | Â | (82.8 | )% | 1,231 | Â | 1,827 | Â | (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 | Â | 297 | Â | 30.3 | % | 273 | Â | 41.8 | % | 1,234 | Â | 1,071 | Â | 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 | Â | 859 | Â | (12.5 | )% | 631 | Â | 19.2 | % | 3,516 | Â | 2,460 | Â | 42.9 | % | ||||||||||||||||||||||
Total noninterest expense | 10,135 | Â | 9,520 | Â | 6.5 | % | 9,620 | Â | 5.4 | % | 40,226 | Â | 35,895 | Â | 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 | Â | 2,816 | Â | 4.2 | % | 4,623 | Â | (36.5 | )% | 10,444 | Â | 14,939 | Â | (30.1 | )% | ||||||||||||||||||||||
Net income | $ | 6,732 | Â | $ | 6,543 | Â | 2.9 | % | $ | 2,339 | Â | 187.8 | % | $ | 24,301 | Â | $ | 16,403 | Â | 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 | |||||||||||||||||||||||||||||||||
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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 | % | ||||||||||||||||||||||||||||
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(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. |
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Pacific City Financial Corporation and Subsidiary Average Balance, Average Yield, and Average Rate ($ in thousands) |
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Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | Â | Â | (Unaudited) | Â | Â | (Unaudited) | |||||||||||||||||||||||||||||||||||||
12/31/2018 | 9/30/2018 | 12/31/2017 | |||||||||||||||||||||||||||||||||||||||||
Average Balance |
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Interest Income/ Expense |
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Avg. Yield/ Rate |
Average Balance |
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Interest Income/ Expense |
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Avg. Yield/ Rate |
Average Balance |
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Interest Income/ Expense |
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Avg. Yield/ Rate |
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Assets | Â | ||||||||||||||||||||||||||||||||||||||||||
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 | Â | 1,067 | Â | 2.77 | % | 156,831 | Â | 866 | Â | 2.19 | % | 53,872 | Â | 267 | Â | 1.97 | % | |||||||||||||||||||||||||
Total interest-earning assets | 1,637,851 | Â | 23,231 | Â | 5.63 | % | 1,591,203 | Â | 21,496 | Â | 5.36 | % | 1,387,309 | Â | 17,871 | Â | 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 | Â | 26,828 | Â | 28,891 | Â | |||||||||||||||||||||||||||||||||||||
Total noninterest-earning assets | 31,919 | Â | 32,650 | Â | 34,666 | Â | |||||||||||||||||||||||||||||||||||||
Total assets | $ | 1,669,770 | Â | $ | 1,623,853 | Â | $ | 1,421,975 | Â | ||||||||||||||||||||||||||||||||||
 | |||||||||||||||||||||||||||||||||||||||||||
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 | Â | 4,121 | Â | 2.07 | % | 795,202 | Â | 3,803 | Â | 1.90 | % | 585,163 | Â | 1,946 | Â | 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 | Â | 136 | Â | 1.80 | % | 30,000 | Â | 137 | Â | 1.81 | % | 40,000 | Â | 172 | Â | 1.71 | % | |||||||||||||||||||||||||
Total interest-bearing liabilities | 1,130,517 | Â | 5,375 | Â | 1.89 | % | 1,103,433 | Â | 4,780 | Â | 1.72 | % | 948,270 | Â | 2,938 | Â | 1.23 | % | |||||||||||||||||||||||||
Noninterest-bearing liabilities | |||||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing demand | 320,232 | 330,021 | 320,174 | ||||||||||||||||||||||||||||||||||||||||
Other liabilities | 12,281 | Â | 11,325 | Â | 10,133 | Â | |||||||||||||||||||||||||||||||||||||
Total noninterest-bearing liabilities | 332,513 | Â | 341,346 | Â | 330,307 | Â | |||||||||||||||||||||||||||||||||||||
Total liabilities | 1,463,030 | 1,444,779 | 1,278,577 | ||||||||||||||||||||||||||||||||||||||||
Total shareholders' equity | 206,740 | Â | 179,074 | Â | 143,398 | Â | |||||||||||||||||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 1,669,770 | Â | $ | 1,623,853 | Â | $ | 1,421,975 | Â | ||||||||||||||||||||||||||||||||||
Net interest income | $ | 17,856 | Â | $ | 16,716 | Â | $ | 14,933 | Â | ||||||||||||||||||||||||||||||||||
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. |
||
 | |||
 |
 |  |  | ||||||||||||||||||||||||||||||||
Pacific City Financial Corporation and Subsidiary Average Balance, Average Yield, and Average Rate (Continued) ($ in thousands) |
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 | ||||||||||||||||||||||||||||||||||
Year Ended | ||||||||||||||||||||||||||||||||||
(Unaudited) | Â | Â | Â | (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 | Â | 3,138 | Â | 2.28 | % | 68,637 | Â | 1,137 | Â | 1.66 | % | ||||||||||||||||||||||
Total interest-earning assets | 1,556,059 | Â | 83,699 | Â | 5.38 | % | 1,306,797 | Â | 65,267 | Â | 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 | Â | 27,793 | Â | ||||||||||||||||||||||||||||||
Total noninterest-earning assets | 33,274 | Â | 33,331 | Â | ||||||||||||||||||||||||||||||
Total assets | $ | 1,589,333 | Â | $ | 1,340,128 | Â | ||||||||||||||||||||||||||||
 | ||||||||||||||||||||||||||||||||||
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 | Â | 13,837 | Â | 1.83 | % | 539,068 | Â | 6,480 | Â | 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 | Â | 611 | Â | 1.75 | % | 20,384 | Â | 348 | Â | 1.71 | % | ||||||||||||||||||||||
Total interest-bearing liabilities | 1,088,677 | Â | 17,951 | Â | 1.65 | % | 889,026 | Â | 10,097 | Â | 1.14 | % | ||||||||||||||||||||||
Noninterest-bearing liabilities | ||||||||||||||||||||||||||||||||||
Noninterest-bearing demand | 319,832 | 305,354 | ||||||||||||||||||||||||||||||||
Other liabilities | 10,395 | Â | 9,026 | Â | ||||||||||||||||||||||||||||||
Total noninterest-bearing liabilities | 330,227 | Â | 314,380 | Â | ||||||||||||||||||||||||||||||
Total liabilities | 1,418,904 | 1,203,406 | ||||||||||||||||||||||||||||||||
Total shareholders' equity | 170,429 | Â | 136,722 | Â | ||||||||||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 1,589,333 | Â | $ | 1,340,128 | Â | ||||||||||||||||||||||||||||
Net interest income | $ | 65,748 | Â | $ | 55,170 | Â | ||||||||||||||||||||||||||||
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. |
||
 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190124005770/en/
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