First Choice Bank, the “Bank” (OTCQX: FCBK), is pleased to report strong earnings of $2.198 million for the fourth quarter of 2016, and record full year earnings of $8.270 million.

Earnings were especially strong year over year, and this was the thirteenth quarter in a row where the Bank earned over $1 million, starting with the fourth quarter of 2013, and the third quarter in a row where the Bank earned over $2 million starting with the second quarter of 2016. In the fourth quarter of 2015, the Bank earned $1.738 million, so the increase in earnings compared to the fourth quarter of 2015 was 26.42%.

As announced previously, the Board of Directors declared a cash dividend of $0.20 per share, payable on February 24, 2017 to shareholders of record on February 8, 2017.

“2016 was an outstanding year of profitability for First Choice Bank. We are especially pleased to be able to show another year of record earnings, while we judiciously repositioned the concentrations in our Balance Sheet. Based upon the Bank’s strong ongoing financial performance and significant capital strength, our Board believes that it is prudent to initiate a quarterly cash dividend of $0.20 per share,” said Peter Hui, Founder & Chairman of First Choice Bank.

Capital ratios remained strong at the quarter-end, with Tier 1 risk-based capital and total risk-based ratios at 14.07% and 15.33%, comparing favorably to the well capitalized requirements of 8% and 10%, respectively.

Gross loans balance, at $704.3 millionat December 31, 2016, up from $669.1 million at December 31, 2015, represented a year over year increase of 5.26%. Compared to the balance of $671.0 million at September 30, 2016, gross loans grew by 4.97% in the linked quarter. At the quarter-end, the Allowance for Loan and Lease Losses (the “ALLL”) stood at $11.60 million, or 1.65% of total loans, and 346.33% of all non-performing assets.

The 30 days past due loans were $0.50 million, representing 0.07% of the total loan portfolio at the end of the quarter. In addition, there were five non-accrual loans in the amount of $3.35 million. Included in the non-accrual loans are four loans classified as Troubled Debt Restructured (“TDR”), which amounted to $2.66 million. Three TDR and non-accrual loans were paying as agreed under their modified terms. There was no Other Real Estate Owned.

SBA Loan production was very stable in 2016, the Bank was ranked in the top 100 most active SBA 7(a) Lenders in the United States in the SBA’s fiscal year 2016. Gain on sale premiums amounted to $3.21 million for the full year of 2016, primarily related to the sale of the guaranteed portions of SBA 7a loans. This represented an increase of 5.25% from the $3.05 million premiums realized in 2015.

At the year-end, total assets were $863.4 million, a year over year increase of 6.32%, compared to the balance at December 31, 2015. In addition, at the year-end, total deposits were $756.6 million, a year over year increase of 6.78% compared to the balance at December 31, 2015.

Robert M. Franko, President and CEO of the Bank, further commented, “We are really proud of the terrific Team effort for 2016. Our entire organization pulled together to make this a truly great year. We are also very pleased to be able to share back some of our earnings with our shareholders in the form of a cash dividend.”

Total Capital at the year-end was $101.4 million, a year over year increase of 9.70% compared to December 31, 2015. The Bank’s book value per share and tangible book value per share were $14.26 and $14.26 respectively at year-end after taking into effect the full impact of the 4% stock dividend declared on May 26, 2016, compared with $13.01 and $13.01 in the year-ago period.

The Bank’s total investment portfolio at quarter-end stood at $41.5 million, including $5.7 million in the Bank’s Held-to-Maturity portfolio. The investment portfolio, combined with cash and due from banks of $103.4 million, as well as Resale Agreement and short-term investments of $6.61, provided the Bank with total Liquidity of $151.5 million.

At the year-end, total deposits were $756.6 million, of which $150.8 million was in non-interest bearing checking accounts. The Bank’s Net Loan to Deposit ratio was 91.57% at the year-end.

Income for the quarter was generated from Net Interest Income of $7.5 million, combined with Non-Interest Income of $1.1 million. Gain on the sale of loans, primarily the guaranteed portions of SBA loans, accounted for $0.8 million of the Non-Interest Income. Non-interest expense in the quarter was $4.8 million. The Net Interest Margin at quarter-end and year-end stood at 3.61% and 3.81% respectively. The Bank’s efficiency ratio was 55.6% at year-end, compared to 59.8% at year-end 2015.

Selected Financial Highlights for the Year ending December 31, 2016:

Net after Tax Income of $2.198 million for the quarter and $8.270 million for the year.
Pre-Tax, Pre-Provision Income of $3.75 million for the quarter and $15.8 million for the year.
Return on average assets annualized at 1.07% for the quarter and 1.01% at year-end.
Return on average tangible common equity annualized at 8.69% for the quarter and 8.49% at year-end.
Allowance for Loan and Lease Losses at 1.65% of total loans, and 346.33% of all non-performing assets.
Earnings Per Share for the quarter at $0.32 (basic) and $0.31 (diluted), after taking into effect the full impact of the 4% stock dividend paid earlier in 2016.
Earnings Per Share for the year stood at $1.20 (basic) and $1.18 (diluted), after taking into effect the full impact of the 4% stock dividend paid earlier in 2016.
Book Value and Tangible Book Value Per Share at $14.26 and $14.26 respectively, after taking into effect the full impact of the 4% stock dividend paid earlier in 2016.
Tier 1 Leverage Ratio, Common Equity Tier 1, Tier 1 Risk-Based Capital and total Risk-Based Ratios at 12.42%, 14.07%, 14.07% and 15.33%, compares very favorably to 5%, 6.5%, 8% and 10%, which are the respective minimum required ratios for a bank to be deemed “Well-Capitalized” by the FDIC.

ABOUT FIRST CHOICE BANK

First Choice Bank, headquartered in Cerritos, California, is a community focused financial institution, serving diverse consumers and commercial clients and specializing in loans to small businesses, Private Banking clients, Commercial and Industrial (C&I) loans, and commercial real estate loans with a niche in providing finance for the hospitality industry. The Bank is a Preferred Small Business Administration (SBA) Lender. Founded in 2005, First Choice Bank has quickly become a leading provider of financial services that enable our customers to grow, maintain strength, and reach unprecedented levels of success. We strive to surpass our clients’ expectations through our efficiency and professionalism and are committed to being “First in Speed, Service, and Solutions.” First Choice Bank stock is traded on the Over the Counter (OTCQX); our Ticker Symbol is FCBK.

The Bank’s web site is www.FirstChoiceBankCA.com.

Forward-Looking Statements

Except for the historical information in this news release, the matters described herein contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially. Such risks and uncertainties include: the credit risks of lending activities, including changes in the level and trend of loan delinquencies and charge-offs, results of examinations by our banking regulators, our ability to maintain adequate levels of capital and liquidity, our ability to manage loan delinquency rates, our ability to price deposits to retain existing customers and achieve low-cost deposit growth, manage expenses and lower the efficiency ratio, expand or maintain the net interest margin, mitigate interest rate risk for changes in the interest rate environment, competitive pressures in the banking industry, access to available sources of credit to manage liquidity, the local and national economic environment, and other risks and uncertainties. Accordingly, undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this release. First Choice Bank undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. Investors are encouraged to read the First Choice Bank annual reports which are available on our website.

 
FIRST CHOICE BANK
FOURTH QUARTER REPORT / DECEMBER 31, 2016
 
BALANCE SHEET
(all amounts in thousand dollars except share and per share information)
      December 31,       September 30,       June 30,       March 31,       December 31,
2016 2016 2016 2016 2015
        (unaudited)       (unaudited)       (unaudited)       (unaudited)       (audited)
ASSETS                                        
 
Cash and due from banks $ 103,426 $ 113,136 $ 89,454 $ 91,407 $ 97,438
Short-term investments 248 - - - -
Resale agreements 6,357 7,873 7,873 5,679 -
Investment securities 41,465 34,391 34,678 40,335 40,983
Stock Investments, restricted 3,764 3,764 3,764 3,238 3,236
 
Loans (gross) 704,349 670,989 689,824 669,830 669,141
Less : unaccreted disc. acquired loans (4 ) (24 ) (25 ) (25 ) (76 )
Less allowance for loan losses   (11,599 )   (11,599 )   (12,895 )   (12,315 )   (11,415 )
Loans, net 692,746 659,365 676,904 657,490 657,650
 
Premises and equipment, net 1,036 1,171 1,212 1,328 1,379
Other assets   14,367     13,353     13,584     11,583     11,400  
TOTAL ASSETS $ 863,410   $ 833,053   $ 827,471   $ 811,059   $ 812,086  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Noninterest bearing deposits $ 150,764 $ 107,030 $ 115,724 $ 106,771 $ 158,377
Interest checking accounts 265,381 279,138 262,134 243,565 229,650
NOW accounts - - - 13,688 10,139
Money market accounts 92,309 122,580 104,631 107,658 98,116
Savings accounts 89,139 88,439 87,286 91,158 90,349
Certificates of deposits   158,968     123,992     130,284     130,900     121,866  
Total Deposits 756,561 721,179 700,059 693,739 708,498
Federal Home Loan Bank Borrowings - 6,000 26,000 18,000 6,000
Other liabilities   5,447     6,250     4,535     4,970     5,153  
Total liabilities 762,007 733,429 730,594 716,708 719,651
 
Total shareholders' equity   101,403     99,624     96,877     94,351     92,435  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 863,410   $ 833,053   $ 827,471   $ 811,059   $ 812,086  
 
STATEMENT OF INCOME
For the three months ended

For the years ended

December 31, September 30, December 31, December 31, December 31,
2016 2016 2015 2016 2015
 
Interest income $ 9,183 $ 9,901 $ 9,284 $ 37,511 $ 32,409
Interest expense   1,681     1,573     1,420     6,271     5,647  
Net interest income 7,503 8,327 7,864 31,240 26,762
Provision for loan losses   0     260     803     1,740     3,119  
Net interest income after provision for loan losses 7,503 8,067 7,061 29,500 23,643
Noninterest income 1,028 1,128 741 4,406 4,075
Noninterest expense   4,785     5,029     4,684     19,824     18,441  
Income before income taxes 3,745 4,166 3,118 14,082 9,277
Provision for income taxes   1,547     1,719     1,380     5,812     3,884  
NET INCOME $ 2,198   $ 2,447   $ 1,738   $ 8,270   $ 5,393  
 

Net income per share-basic 1

 $ 0.32 $ 0.36 $ 0.30 $ 1.20 $ 0.93

Net income per share-diluted 1 2

 $ 0.31 $ 0.35 $ 0.29 $ 1.18 $ 0.91

Weighted average shares - basic 1

 6,877,370 6,868,503 5,790,439 6,877,370 5,790,439

Weighted average shares - diluted 1 2

 7,001,495 7,001,133 5,918,499 7,001,495 5,918,499
Return on assets (annualized) 1.07 % 1.19 % 0.87 % 1.01 % 0.74 %
Return on equity (annualized) 8.69 % 9.92 % 7.56 % 8.49 % 7.22 %
Net interest margin 3.61 % 4.05 % 3.80 % 3.81 % 3.67 %
Efficiency ratio 56.10 % 53.19 % 54.43 % 55.61 % 59.80 %
 
SELECTED RATIOS
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
Book value $ 14.26 $ 13.99 $ 13.64 $ 13.28 $ 13.01

Tangible book value 3

 $ 14.26 $ 13.99 $ 13.64 $ 13.28 $ 13.01
Allowance for loan losses as a percent of total gross loans 1.65 % 1.73 % 1.87 % 1.84 % 1.71 %

Nonperforming assets as a percent of total assets 4

 0.39 % 0.27 % 0.43 % 0.48 % 0.48 %
Allowance for loan losses as a percent of nonperforming assets 346.33 % 506.35 % 363.65 % 319.47 % 291.70 %
Net Loan to deposit ratio 91.57 % 91.43 % 96.69 % 94.77 % 92.82 %
Tier one leverage capital 12.42 % 12.09 % 11.85 % 11.67 % 11.65 %
Total risk based capital 15.33 % 15.59 % 14.54 % 14.65 % 14.43 %
 
(1) Per common share data has been adjusted for the 4% stock dividend issued to shareholders on the record of May 26,2016
(2) Diluted shares are calculated using the treasury method since Q1 2015.
(3) Book value per share excluding intangible assets
(4) Nonperforming assets include nonaccrual loans, loans past due 90 days or more and still accruing, and other real estate owned.