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LOS ANGELES–(BUSINESS WIRE)–PCB Bancorp (the “Company”) (NASDAQ: PCB), the holding company of Pacific City Bank (the “Bank”), today reported net income of $6.8 million, or $0.42 per diluted common share for the third quarter of 2019, compared with $6.6 million, or $0.40 per diluted common share, for the previous quarter and $6.5 million, or $0.44 per diluted common share, for the year-ago quarter.

Q3 2019 Financial Highlights

  • Net income totaled $6.8 million or $0.42 per diluted common share;
  • Total assets were $1.70 billion at September 30, 2019, a decrease of $27.0 million, or 1.6%, from $1.73 billion at June 30, 2019, an increase of $2.4 million, or 0.1%, from $1.70 billion at December 31, 2018, and an increase of $35.7 million, or 2.1%, from $1.66 billion at September 30, 2018;
  • Loans held-for-investment, net of deferred costs (fees), were $1.39 billion at September 30, 2019, a decrease of $5.7 million, or 0.4%, from $1.40 billion at June 30, 2019, an increase of $51.1 million, or 3.8%, from $1.34 billion at December 31, 2018, and an increase of $80.7 million, or 6.2%, from $1.31 billion at September 30, 2018;
  • Total deposits were $1.43 billion at September 30, 2019, a decrease of $14.3 million, or 1.0%, from $1.45 billion at June 30, 2019, a decrease of $11.5 million, or 0.8%, from $1.44 billion at December 31, 2018 and an increase of $12.7 million, or 0.9%, from $1.42 billion at September 30, 2018;
  • The Company repurchased 374,069 shares of its common stock totaling $6.1 million under the publicly announced $6.5 million share repurchase program through September 30, 2019; and
  • The Company declared a cash dividend of $0.06 per common share.

“We are pleased to report another strong quarterly financial performance for the third quarter of 2019 highlighted by $6.8 million net income, or $0.42 per diluted common share,” stated Henry Kim, President and Chief Executive Officer. “In spite of the challenging environment of declining interest rates, we maintained a net interest margin of 4.11% during the third quarter of 2019. Year-to-date, we maintained a net interest margin of 4.16%.”

Financial Highlights (Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

($ in thousands, except per share data)

 

9/30/2019

 

6/30/2019

 

% Change

 

9/30/2018

 

% Change

 

9/30/2019

 

9/30/2018

 

% Change

Net income

 

$

6,785

 

 

$

6,601

 

 

2.8

%

 

$

6,543

 

 

3.7

%

 

$

19,950

 

 

$

17,569

 

 

13.6

%

Diluted earnings per common share

 

$

0.42

 

 

$

0.40

 

 

5.0

%

 

$

0.44

 

 

(4.5

)%

 

$

1.23

 

 

$

1.25

 

 

(1.6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

17,529

 

 

$

17,692

 

 

(0.9

)%

 

$

16,716

 

 

4.9

%

 

$

52,374

 

 

$

47,892

 

 

9.4

%

Provision (reversal) for loan losses

 

(102

)

 

394

 

 

(125.9

)%

 

417

 

 

(124.5

)%

 

207

 

 

937

 

 

(77.9

)%

Noninterest income

 

2,802

 

 

3,054

 

 

(8.3

)%

 

2,580

 

 

8.6

%

 

8,265

 

 

8,215

 

 

0.6

%

Noninterest expense

 

10,777

 

 

10,984

 

 

(1.9

)%

 

9,520

 

 

13.2

%

 

32,050

 

 

30,091

 

 

6.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (1)

 

1.55

%

 

1.52

%

 

 

 

1.60

%

 

 

 

1.55

%

 

1.50

%

 

 

Return on average shareholders’ equity (1), (2)

 

12.02

%

 

12.01

%

 

 

 

14.50

%

 

 

 

12.15

%

 

14.85

%

 

 

Net interest margin (1)

 

4.11

%

 

4.17

%

 

 

 

4.17

%

 

 

 

4.16

%

 

4.19

%

 

 

Efficiency ratio (3)

 

53.01

%

 

52.95

%

 

 

 

49.34

%

 

 

 

52.85

%

 

53.63

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands, except per share data)

 

9/30/2019

 

6/30/2019

 

% Change

 

12/31/2018

 

% Change

 

9/30/2018

 

% Change

Total assets

 

$

1,699,446

 

 

$

1,726,486

 

 

(1.6

)%

 

$

1,697,028

 

 

0.1

%

 

$

1,663,787

 

 

2.1

%

Net loans held-for-investment

 

1,376,736

 

 

1,382,229

 

 

(0.4

)%

 

1,325,515

 

 

3.9

%

 

1,296,027

 

 

6.2

%

Total deposits

 

1,432,262

 

 

1,446,526

 

 

(1.0

)%

 

1,443,753

 

 

(0.8

)%

 

1,419,526

 

 

0.9

%

Book value per common share (2), (4)

 

$

14.30

 

 

$

13.98

 

 

2.3

%

 

$

13.16

 

 

8.7

%

 

$

12.71

 

 

12.5

%

Tier 1 leverage ratio (consolidated)

 

12.87

%

 

12.74

%

 

 

 

12.60

%

 

 

 

12.59

%

 

 

Total shareholders’ equity to total assets (2)

 

13.22

%

 

12.94

%

 

 

 

12.39

%

 

 

 

12.20

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 (Unaudited)

Net Interest Income and Net Interest Margin

The following table presents the components of net interest income for the periods indicated:

 

 

Three Months Ended

 

Nine Months Ended

($ in thousands)

 

9/30/2019

 

6/30/2019

 

% Change

 

9/30/2018

 

% Change

 

9/30/2019

 

9/30/2018

 

% Change

Interest income/expense on:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

 

21,876

 

 

$

 

21,969

 

 

(0.4

)%

 

$

 

19,699

 

 

11.1

%

 

$

 

64,779

 

 

$

 

55,749

 

 

16.2

%

Investment securities

 

 

978

 

 

 

1,062

 

 

(7.9

)%

 

 

931

 

 

5.0

%

 

 

3,133

 

 

 

2,648

 

 

18.3

%

Other interest-earning assets

 

 

833

 

 

 

999

 

 

(16.6

)%

 

 

866

 

 

(3.8

)%

 

 

2,757

 

 

 

2,071

 

 

33.1

%

Total interest-earning assets

 

 

23,687

 

 

 

24,030

 

 

(1.4

)%

 

 

21,496

 

 

10.2

%

 

 

70,669

 

 

 

60,468

 

 

16.9

%

Interest-bearing deposits

 

 

6,060

 

 

 

6,200

 

 

(2.3

)%

 

 

4,643

 

 

30.5

%

 

 

17,925

 

 

 

12,101

 

 

48.1

%

Borrowings

 

 

98

 

 

 

138

 

 

(29.0

)%

 

 

137

 

 

(28.5

)%

 

 

370

 

 

 

475

 

 

(22.1

)%

Total interest-bearing liabilities

 

 

6,158

 

 

 

6,338

 

 

(2.8

)%

 

 

4,780

 

 

28.8

%

 

 

18,295

 

 

 

12,576

 

 

45.5

%

Net interest income

 

$

 

17,529

 

 

$

 

17,692

 

 

(0.9

)%

 

$

 

16,716

 

 

4.9

%

 

$

 

52,374

 

 

$

 

47,892

 

 

9.4

%

Average balance of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

 

1,396,437

 

 

$

 

1,378,910

 

 

1.3

%

 

$

 

1,280,352

 

 

9.1

%

 

$

 

1,372,704

 

 

$

 

1,245,551

 

 

10.2

%

Investment securities

 

 

161,528

 

 

 

167,991

 

 

(3.8

)%

 

 

154,020

 

 

4.9

%

 

 

165,638

 

 

 

150,462

 

 

10.1

%

Other interest-earning assets

 

 

135,774

 

 

 

154,661

 

 

(12.2

)%

 

 

156,831

 

 

(13.4

)%

 

 

143,616

 

 

 

132,483

 

 

8.4

%

Total interest-earning assets

 

$

 

1,693,739

 

 

$

 

1,701,562

 

 

(0.5

)%

 

$

 

1,591,203

 

 

6.4

%

 

$

 

1,681,958

 

 

$

 

1,528,496

 

 

10.0

%

Interest-bearing deposits

 

$

 

1,126,376

 

 

$

 

1,143,678

 

 

(1.5

)%

 

$

 

1,073,433

 

 

4.9

%

 

$

 

1,128,606

 

 

$

 

1,038,019

 

 

8.7

%

Borrowings

 

 

20,326

 

 

 

30,166

 

 

(32.6

)%

 

 

30,000

 

 

(32.2

)%

 

 

26,820

 

 

 

36,557

 

 

(26.6

)%

Total interest-bearing liabilities

 

$

 

1,146,702

 

 

$

 

1,173,844

 

 

(2.3

)%

 

$

 

1,103,433

 

 

3.9

%

 

$

 

1,155,426

 

 

$

 

1,074,576

 

 

7.5

%

Annualized average yield/cost of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

 

6.22

%

 

 

6.39

%

 

 

 

 

6.10

%

 

 

 

 

6.31

%

 

 

5.98

%

 

 

Investment securities

 

 

2.40

%

 

 

2.54

%

 

 

 

 

2.40

%

 

 

 

 

2.53

%

 

 

2.35

%

 

 

Other interest-earning assets

 

 

2.43

%

 

 

2.59

%

 

 

 

 

2.19

%

 

 

 

 

2.57

%

 

 

2.09

%

 

 

Total interest-earning assets

 

 

5.55

%

 

 

5.66

%

 

 

 

 

5.36

%

 

 

 

 

5.62

%

 

 

5.29

%

 

 

Interest-bearing deposits

 

 

2.13

%

 

 

2.17

%

 

 

 

 

1.72

%

 

 

 

 

2.12

%

 

 

1.56

%

 

 

Borrowings

 

 

1.91

%

 

 

1.83

%

 

 

 

 

1.81

%

 

 

 

 

1.84

%

 

 

1.74

%

 

 

Total interest-bearing liabilities

 

 

2.13

%

 

 

2.17

%

 

 

 

 

1.72

%

 

 

 

 

2.12

%

 

 

1.56

%

 

 

Net interest margin

 

 

4.11

%

 

 

4.17

%

 

 

 

 

4.17

%

 

 

 

 

4.16

%

 

 

4.19

%

 

 

Supplementary information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net accretion of discount (premium) on loans included in interest on loans

 

$

 

1,031

 

 

$

 

1,194

 

 

(13.7

)%

 

$

 

1,090

 

 

(5.4

)%

 

$

 

3,083

 

 

$

 

3,057

 

 

0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans. The decrease in average yield for the current quarter compared with the previous quarter was primarily due to the recent decreases in market rates. The increases in average yield for the three and nine months ended September 30, 2019 compared with the same periods of 2018 were primarily due to the rising interest rate environment in 2018 and higher market rates in 2019. The Company had benefited from its high proportion of variable rate loans that had repriced along with such interest rate environment; however, the Company strategically had increased the proportion of fixed rate loans throughout the current year in order to better-position its balance sheet to match the current and potential future interest rate environment.

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:

 

 

9/30/2019

 

6/30/2019

 

12/31/2018

 

9/30/2018

 

 

% to Total

Loans

 

Weighted-

Average

Contractual

Rate

 

% to Total

Loans

 

Weighted-

Average

Contractual

Rate

 

% to Total

Loans

 

Weighted-

Average

Contractual

Rate

 

% to Total

Loans

 

Weighted-

Average

Contractual

Rate

Fixed rate loans

 

40.5

%

 

5.26

%

 

37.8

%

 

5.24

%

 

34.4

%

 

5.13

%

 

32.3

%

 

5.10

%

Variable rate loans

 

59.5

%

 

5.88

%

 

62.2

%

 

6.29

%

 

65.6

%

 

6.30

%

 

67.7

%

 

6.03

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Securities. The decrease in average yield for the current quarter compared with the previous quarter was primarily due to an increase in premium amortization from a higher prepayment trend in the current quarter. The increase in average yield for the nine months ended September 30, 2019 compared with the same periods of 2018 was primarily due to additional purchases of investment securities along with the rising interest rate environment in 2018 and higher market rates in 2019. The Company did not purchase any investment securities during the current quarter, but purchased new investment securities of $24.3 million during the last 12-month period.

Other Interest-Earning Assets. The average yield on other interest-bearing assets is closely related to the changes in market rates, as the Company maintains most of its cash at the Federal Reserve Bank account. The average balance for the current quarter decreased as loan growth was mainly supported by the Company’s cash on deposit at the Federal Reserve Bank.

Interest-Bearing Deposits. The decrease in average cost for the current quarter was primarily due to the recent decreases in market rates; however, the impact was smaller than the change in average yield on interest-earning assets due to high competition in the Company’s deposit target markets.

Borrowings. The Company had fixed rate term advances from FHLB of $20.0 million with a weighted average rate of 1.92% and original maturity terms ranging from 3 to 5 years at September 30, 2019.

Provision (Reversal) for Loan Losses

Provision (reversal) for loan losses was $(102) thousand for the current quarter compared with $394 thousand for the previous quarter and $417 thousand for the year-ago quarter. The reversal for the current quarter was primarily due to a decrease in loans held-for-investment as well as a decrease in historical loss rates and changes in qualitative adjustment factors. For the nine months ended September 30, 2019 and 2018, the Company recognized provision for loan losses of $207 thousand and $937 thousand, respectively. The Company recorded net charge-offs of $132 thousand for the current quarter compared with net charge-offs of $203 thousand for the previous quarter and net recoveries of $59 thousand for the year-ago quarter. For the nine months ended September 30, 2019 and 2018, the Company recorded net charge-offs of $280 thousand and $64 thousand, respectively.

Allowance for loan losses to total loans held-for-investment ratio was 0.94% at September 30, 2019, 0.96% at June 30, 2019, 0.98% at December 31, 2018, and 1.00% at September 30, 2018. The decrease in this ratio was primarily due to a decrease in historical loss rates and changes in qualitative adjustment factors.

Noninterest Income

The following table presents the components of noninterest income for the periods indicated:

 

 

Three Months Ended

 

Nine Months Ended

($ in thousands)

 

9/30/2019

 

6/30/2019

 

% Change

 

9/30/2018

 

% Change

 

9/30/2019

 

9/30/2018

 

% Change

Gain on sale of loans

 

 

1,540

 

 

 

1,891

 

 

(18.6

)%

 

 

1,328

 

 

16.0

%

 

 

4,551

 

 

 

4,477

 

 

1.7

%

Service charges and fees on deposits

 

 

405

 

 

 

368

 

 

10.1

%

 

 

377

 

 

7.4

%

 

 

1,137

 

 

 

1,102

 

 

3.2

%

Loan servicing income

 

 

534

 

 

 

492

 

 

8.5

%

 

 

578

 

 

(7.6

)%

 

 

1,657

 

 

 

1,789

 

 

(7.4

)%

Other income

 

 

323

 

 

 

303

 

 

6.6

%

 

 

297

 

 

8.8

%

 

 

920

 

 

 

847

 

 

8.6

%

Total noninterest income

 

$

 

 

2,802

 

 

$

 

 

3,054

 

 

(8.3

)%

 

$

 

 

2,580

 

 

8.6

%

 

$

 

 

8,265

 

 

$

 

 

8,215

 

 

0.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on Sale of Loans. The following table presents information on gain on sale of loans for the periods indicated:

 

 

Three Months Ended

 

Nine Months Ended

($ in thousands)

 

9/30/2019

 

6/30/2019

 

% Change

 

9/30/2018

 

% Change

 

9/30/2019

 

9/30/2018

 

% Change

Gain on sale of SBA loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sold loan balance

 

$

 

22,186

 

 

$

 

29,168

 

 

(23.9

)%

 

$

 

23,108

 

 

(4.0

)%

 

$

 

72,537

 

 

$

 

65,591

 

 

10.6

%

Premium received

 

 

2,061

 

 

 

2,665

 

 

(22.7

)%

 

 

1,915

 

 

7.6

%

 

 

6,288

 

 

 

6,041

 

 

4.1

%

Gain recognized

 

 

1,498

 

 

 

1,884

 

 

(20.5

)%

 

 

1,306

 

 

14.7

%

 

 

4,487

 

 

 

4,219

 

 

6.4

%

Gain on sale of residential property loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sold loan balance

 

$

 

4,661

 

 

$

 

375

 

 

1,142.9

%

 

$

 

2,217

 

 

110.2

%

 

$

 

7,432

 

 

$

 

10,899

 

 

(31.8

)%

Gain recognized

 

 

42

 

 

 

7

 

 

500.0

%

 

 

22

 

 

90.9

%

 

 

64

 

 

 

213

 

 

(70.0

)%

Gain on sale of other loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sold loan balance

 

$

 

 

 

$

 

 

 

%

 

$

 

 

 

%

 

$

 

 

 

$

 

1,084

 

 

(100.0

)%

Gain recognized

 

 

 

 

 

%

 

 

 

%

 

 

 

 

45

 

 

(100.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service Charges and Fees on Deposits. The increases were primarily due to an increase in non-sufficient fund charges during the current quarter.

Loan Servicing Income. The Company services SBA loans and certain residential property loans that are sold to the secondary market. The increase for the current quarter compared with the previous quarter was primarily due to a decrease in servicing asset amortization. During the previous quarter, servicing asset amortization was increased from a higher prepayment trend. The following table presents information on loan servicing income for the periods indicated.

 

 

Three Months Ended

 

Nine Months Ended

($ in thousands)

 

9/30/2019

 

6/30/2019

 

% Change

 

9/30/2018

 

% Change

 

9/30/2019

 

9/30/2018

 

% Change

Loan servicing income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing income received

 

$

 

1,195

 

 

$

 

1,190

 

 

0.4

%

 

$

 

1,265

 

 

(5.5

)%

 

$

 

3,532

 

 

$

 

3,719

 

 

(5.0

)%

Servicing assets amortization

 

 

(661

)

 

 

(698

)

 

(5.3

)%

 

 

(687

)

 

(3.8

)%

 

 

(1,875

)

 

 

(1,930

)

 

(2.8

)%

Loan servicing income

 

$

 

534

 

 

$

 

492

 

 

8.5

%

 

$

 

578

 

 

(7.6

)%

 

$

 

1,657

 

 

$

 

1,789

 

 

(7.4

)%

Underlying loans at end of period

 

$

 

493,923

 

 

$

 

504,094

 

 

(2.0

)%

 

$

 

533,860

 

 

(7.5

)%

 

$

 

493,923

 

 

$

 

533,860

 

 

(7.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income. The increases were primarily due to increases in wire and remittance fees, and debit card interchanges fees.

Noninterest Expense

The following table presents the components of noninterest expense for the periods indicated:

 

 

Three Months Ended

 

Nine Months Ended

($ in thousands)

 

9/30/2019

 

6/30/2019

 

% Change

 

9/30/2018

 

% Change

 

9/30/2019

 

9/30/2018

 

% Change

Salaries and employee benefits

 

$

 

6,901

 

 

$

 

6,600

 

 

4.6

%

 

$

 

5,840

 

 

18.2

%

 

$

 

20,123

 

 

$

 

18,239

 

 

10.3

%

Occupancy and equipment

 

 

1,408

 

 

 

1,407

 

 

0.1

%

 

 

1,244

 

 

13.2

%

 

 

4,128

 

 

 

3,634

 

 

13.6

%

Professional fees

 

 

664

 

 

 

686

 

 

(3.2

)%

 

 

213

 

 

211.7

%

 

 

2,108

 

 

 

1,724

 

 

22.3

%

Marketing and business promotion

 

 

292

 

 

 

529

 

 

(44.8

)%

 

 

555

 

 

(47.4

)%

 

 

1,049

 

 

 

1,484

 

 

(29.3

)%

Data processing

 

 

348

 

 

 

338

 

 

3.0

%

 

 

314

 

 

10.8

%

 

 

1,004

 

 

 

911

 

 

10.2

%

Director fees and expenses

 

 

188

 

 

 

185

 

 

1.6

%

 

 

220

 

 

(14.5

)%

 

 

562

 

 

 

661

 

 

(15.0

)%

Regulatory assessments

 

 

 

 

309

 

 

(100.0

)%

 

 

192

 

 

(100.0

)%

 

 

425

 

 

 

469

 

 

(9.4

)%

Other expenses

 

 

976

 

 

 

930

 

 

4.9

%

 

 

942

 

 

3.6

%

 

 

2,651

 

 

 

2,969

 

 

(10.7

)%

Total noninterest expense

 

$

 

10,777

 

 

$

 

10,984

 

 

(1.9

)%

 

$

 

9,520

 

 

13.2

%

 

$

 

32,050

 

 

$

 

30,091

 

 

6.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and Employee Benefits. Overall, the increases were primarily due to the hiring of new experienced employees with higher salaries in order to support the expansion of the Company’s infrastructure for being a public company and to enhance the controls and processes on Bank Secrecy Act and Anti-Money Laundering (“BSA/AML”) compliance.

Occupancy and Equipment. The increases for the three and nine months ended September 30, 2019 compared with same periods of 2018 were primarily due to an establishment of new loan production office in Artesia, California in December 2018 and an increase in equipment maintenance expense.

Professional Fees. The increases for the three and nine months ended September 30, 2019 compared with the same periods of 2018 were primarily due to increases in audit and other professional fees for being a public company and expense related to enhancement of the Bank’s controls and processes on BSA/AML compliance programs, and a true-up of expenses that were directly related to the initial public offering during the year-ago quarter.

Regulatory Assessments. The decreases were primarily due to a small bank assessment credit from the FDIC during the current quarter, partially offset by an increase in assessment rate from the recent consent order relating to the Bank’s compliance with BSA/AML. The Company would have recognized regulatory assessments expense of $228 thousand without the small bank assessment credit for the current quarter. Regulatory assessments expense for the next quarter is also expected to be reduced by approximately $116 thousand, which is the remaining portion of small bank assessment credit that exceeded the current quarter expense. Regulatory assessment for the previous quarter included an adjustment made for the assessment rate increase for the first quarter of 2019.

Other Expenses. The decrease for the nine months ended September 30, 2019 compared with the same period of 2018 was primarily due to a $577 thousand reimbursement paid to the SBA during the second quarter of 2018, partially offset by increases in other loan related legal and office expenses.

Balance Sheet (Unaudited)

Loans

The following table presents a composition of total loans (includes both loans held-for-sale and loans held-for-investment, net of deferred costs (fees)) as of the dates indicated:

($ in thousands)

 

9/30/2019

 

6/30/2019

 

% Change

 

12/31/2018

 

% Change

 

9/30/2018

 

% Change

Real estate loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial property

 

$

759,881

 

 

$

748,526

 

 

1.5

%

 

$

709,409

 

 

7.1

%

 

$

702,487

 

 

8.2

%

Residential property

 

236,382

 

 

240,630

 

 

(1.8

)%

 

233,816

 

 

1.1

%

 

214,960

 

 

10.0

%

SBA property

 

126,347

 

 

128,208

 

 

(1.5

)%

 

120,939

 

 

4.5

%

 

128,149

 

 

(1.4

)%

Construction

 

17,175

 

 

22,455

 

 

(23.5

)%

 

27,323

 

 

(37.1

)%

 

28,838

 

 

(40.4

)%

Commercial and industrial loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial term

 

105,433

 

 

105,651

 

 

(0.2

)%

 

102,133

 

 

3.2

%

 

96,017

 

 

9.8

%

Commercial lines of credit

 

95,997

 

 

101,531

 

 

(5.5

)%

 

91,994

 

 

4.4

%

 

82,591

 

 

16.2

%

SBA commercial term

 

25,326

 

 

24,762

 

 

2.3

%

 

27,147

 

 

(6.7

)%

 

28,493

 

 

(11.1

)%

Other consumer loans

 

23,289

 

 

23,794

 

 

(2.1

)%

 

25,921

 

 

(10.2

)%

 

27,589

 

 

(15.6

)%

Loans held-for-investment

 

1,389,830

 

 

1,395,557

 

 

(0.4

)%

 

1,338,682

 

 

3.8

%

 

1,309,124

 

 

6.2

%

Loans held-for-sale

 

1,583

 

 

440

 

 

259.8

%

 

5,781

 

 

(72.6

)%

 

12,957

 

 

(87.8

)%

Total loans

 

$

1,391,413

 

 

$

1,395,997

 

 

(0.3

)%

 

$

1,344,463

 

 

3.5

%

 

$

1,322,081

 

 

5.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The decrease in loans held-for-investment for the current quarter was primarily due to pay-downs and pay-offs of $102.0 million, partially offset by new funding of $70.4 million and advances on lines of credit of $26.6 million. During the current quarter, new funding decreased by $38.8 million compared with the previous quarter primarily due to higher competition and pay-downs and pay-offs also increased by $14.9 million compared with the previous quarter. The increase for the nine months ended September 30, 2019 was primarily due to new funding of $252.9 million and advances on lines of credit of $80.5 million, partially offset by pay-downs and pay-offs of $280.8 million.

The increase in loans held-for-sale for the current quarter was primarily due to new funding of $27.5 million, partially offset by sales of $26.8 million. The decrease in loans held-for-sale for the nine months ended September 30, 2019 was primarily due to sales of $80.0 million, partially offset by new funding of $75.0 million and a loan transferred from loans held-for-investment of $824 thousand.

Credit Quality

The following table presents compositions of non-performing loans and non-performing assets as of the dates indicated:

($ in thousands)

 

9/30/2019

 

6/30/2019

 

% Change

 

12/31/2018

 

% Change

 

9/30/2018

 

% Change

Nonaccrual loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial property

 

$

 

 

$

 

 

%

 

$

 

 

%

 

$

234

 

 

(100.0

)%

Residential property

 

 

 

 

 

%

 

302

 

 

(100.0

)%

 

 

 

%

SBA property

 

1,441

 

 

1,372

 

 

5.0

%

 

540

 

 

166.9

%

 

970

 

 

48.6

%

Commercial and industrial loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial lines of credit

 

327

 

 

 

 

%

 

 

 

%

 

 

 

%

SBA commercial term

 

68

 

 

16

 

 

325.0

%

 

203

 

 

(66.5

)%

 

254

 

 

(73.2

)%

Consumer loans

 

7

 

 

41

 

 

(82.9

)%

 

16

 

 

(56.3

)%

 

114

 

 

(93.9

)%

Total nonaccrual loans held-for-investment

 

1,843

 

 

1,429

 

 

29.0

%

 

1,061

 

 

73.7

%

 

1,572

 

 

17.2

%

Loans past due 90 days or more and still accruing

 

 

 

 

 

%

 

 

 

%

 

 

 

%

Non-performing loans (“NPLs”)

 

1,843

 

 

1,429

 

 

29.0

%

 

1,061

 

 

73.7

%

 

1,572

 

 

17.2

%

Other real estate owned (“OREO”)

 

 

 

395

 

 

(100.0

)%

 

 

 

%

 

 

 

%

Non-performing assets (“NPAs”)

 

$

1,843

 

 

$

1,824

 

 

1.0

%

 

$

1,061

 

 

73.7

%

 

$

1,572

 

 

17.2

%

Loans past due and still accruing:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans past due 30 to 59 days and still accruing

 

$

664

 

 

$

804

 

 

(17.4

)%

 

$

368

 

 

80.4

%

 

$

337

 

 

97.0

%

Loans past due 60 to 89 days and still accruing

 

59

 

 

5

 

 

1,080.0

%

 

9

 

 

555.6

%

 

426

 

 

(86.2

)%

Loans past due 90 days or more and still accruing

 

 

 

 

 

%

 

 

 

%

 

 

 

%

Total loans past due and still accruing

 

$

723

 

 

$

809

 

 

(10.6

)%

 

377

 

 

91.8

%

 

$

763

 

 

(5.2

)%

Troubled debt restructurings (“TDRs”):

 

 

 

 

 

 

 

 

 

 

 

 

 

Accruing TDRs

 

$

713

 

 

$

391

 

 

82.4

%

 

$

432

 

 

65.0

%

 

$

467

 

 

52.7

%

Nonaccrual TDRs

 

249

 

 

131

 

 

90.1

%

 

131

 

 

90.1

%

 

458

 

 

(45.6

)%

Total TDRs

 

$

962

 

 

$

522

 

 

84.3

%

 

$

563

 

 

70.9

%

 

$

925

 

 

4.0

%

NPLs to loans held-for-investment

 

0.13

%

 

0.10

%

 

 

 

0.08

%

 

 

 

0.12

%

 

 

NPAs to total assets

 

0.11

%

 

0.11

%

 

 

 

0.06

%

 

 

 

0.09

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Classified Assets

Classified loans were $7.9 million at September 30, 2019, an increase of $394 thousand, or 5.3%, from $7.5 million at June 30, 2019, an increase of $1.0 million, or 14.8%, from $6.9 million at December 31, 2018, and an increase of $1.6 million, or 26.4%, from $6.2 million at September 30, 2018.

Classified assets, which consist of classified loans and OREO, and the classified assets to total assets ratios were $7.9 million and 0.46%, respectively, at September 30, 2019, $7.9 million and 0.46%, respectively, at June 30, 2019, $6.9 million and 0.40%, respectively, at December 31, 2018, and $6.2 million and 0.37%, respectively, at September 30, 2018.

Investment Securities

Total investment securities were $156.2 million at September 30, 2019, a decrease of $9.0 million, or 5.5%, from $165.2 million at June 30, 2019, a decrease of $12.5 million, or 7.4%, from $168.8 million at December 31, 2018, and a decrease of $877 thousand, or 0.6%, from $157.1 million at September 30, 2018. The decrease for the current quarter was primarily due to principal pay-downs and calls of $9.2 million and net premium amortization of $234 thousand, partially offset by an increase in fair value of securities available-for-sale of $442 thousand. The decrease for the nine months ended September 30, 2019 was primarily due to principal pay-downs and calls of $23.6 million and net premium amortization of $641 thousand, partially offset by purchases of $8.4 million and an increase in fair value of securities available-for-sale of $3.3 million.

Deposits

The following table presents deposit mix as of the dates indicated:

 

 

9/30/2019

 

6/30/2019

 

12/31/2018

 

9/30/2018

($ in thousands)

 

Amount

 

% to Total

 

Amount

 

% to Total

 

Amount

 

% to Total

 

Amount

 

% to Total

Noninterest-bearing demand deposits

 

$

 

353,448

 

 

24.7

%

 

$

 

339,603

 

 

23.5

%

 

$

 

329,270

 

 

22.8

%

 

$

 

350,346

 

 

24.7

%

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW

 

 

16,108

 

 

1.1

%

 

 

12,638

 

 

0.9

%

 

 

24,683

 

 

1.7

%

 

 

11,638

 

 

0.8

%

Money market accounts

 

 

307,663

 

 

21.5

%

 

 

311,865

 

 

21.6

%

 

 

280,733

 

 

19.4

%

 

 

263,704

 

 

18.6

%

Savings

 

 

8,206

 

 

0.6

%

 

 

6,844

 

 

0.5

%

 

 

8,194

 

 

0.6

%

 

 

8,417

 

 

0.6

%

Time deposits of $250,000 or less

 

 

417,549

 

 

29.1

%

 

 

453,286

 

 

31.2

%

 

 

477,134

 

 

33.0

%

 

 

476,370

 

 

33.5

%

Time deposits of more than $250,000

 

 

206,785

 

 

14.4

%

 

 

204,780

 

 

14.2

%

 

 

181,239

 

 

12.6

%

 

 

161,551

 

 

11.4

%

State and brokered deposits

 

 

122,503

 

 

8.6

%

 

 

117,510

 

 

8.1

%

 

 

142,500

 

 

9.9

%

 

 

147,500

 

 

10.4

%

Total interest-bearing deposits

 

 

1,078,814

 

 

75.3

%

 

 

1,106,923

 

 

76.5

%

 

 

1,114,483

 

 

77.2

%

 

 

1,069,180

 

 

75.3

%

Total deposits

 

$

 

1,432,262

 

 

100.0

%

 

$

 

1,446,526

 

 

100.0

%

 

$

 

1,443,753

 

 

100.0

%

 

$

 

1,419,526

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contacts

Timothy Chang

Executive Vice President & Chief Financial Officer

213-210-2000

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