Pacific City Financial Corporation (the “Company”) (OTC Pink: PFCF), the holding company of Pacific City Bank, today reported net income of $4.3 million, or $0.32 per diluted common share, compared with $3.5 million, or $0.27 per diluted common share, in the previous quarter and $2.9 million, or $0.24 per diluted common share, in the year-ago quarter. For the 2016 year, net income was $14.0 million, or $1.11 per diluted common share, compared with $12.2 million, or $1.02 per diluted common share, in 2015.

2016 Fourth Quarter Highlights

  • The Company announced 10% of stock dividend
  • Net income totaled $4.3 million or $0.32 per diluted common share
  • Loan origination in 2016 was $588.2 million compared with $470.0 million in 2015
  • Total assets increased $184.1 million, or 17.7%, to $1.2 billion at 2016 yearend compared with $1.0 billion at 2015 yearend
  • Total loans, including loans held-for-sale and net of unearned fee/cost, increased $187.0 million, or 22.1%, to $1,033.3 million at 2016 yearend compared with $846.3 million at 2015 yearend
  • Total deposits increased $152.4 million, or 16.2%, to $1,091.8 million at 2016 yearend compared with $939.4 million at 2015 yearend

“We are pleased to announce another solid quarter with strong net income and loan growth. In connection to our strong financial performance we announced our third 10% stock dividend in December in as many years in addition to continually declaring cash dividends as part of our ongoing effort to benefit our shareholders,” said Haeyoung Cho, President and CEO. “Our net income in the fourth quarter of 2016 increased significantly to $4.3 million compared with $3.5 million the previous quarter and $2.9 million in the year-ago quarter. Our loan portfolio increased $21.7 million, or 2.1%, to $1,033 million at December 31, 2016 compared with $1,012 million at September 30, 2016, and increased $187 million, or 22.1%, compared with $846 million at December 31, 2015.”

RESULTS OF OPERATIONS

Net Income

Net income in the fourth quarter of 2016 increased $832,000, or 23.9%, to $4.3 million compared with $3.5 million in the previous quarter and increased $1.4 million, or 48.5%, compared with $2.9 million in the year-ago quarter. Diluted earnings per share were $0.32 in the fourth quarter of 2016 compared with $0.27 in the previous quarter and $0.24 in the year-ago quarter. Net income for 2016 year increased $1.8 million, or 14.9%, to $14.0 million compared with $12.2 million in the previous year.

Net Interest Income and Net Interest Margin

Net interest income before provision for loan losses in the fourth quarter of 2016 increased $1.2 million, or 10.4%, to $12.6 million compared with $11.4 million in the previous quarter and increased $2.7 million, or 27.6%, compared with $9.9 million in the year-ago quarter. The increase was primarily due to an increase in loan portfolio balance. Net interest income before provision for loan losses for 2016 year increased $8.5 million, or 23.1%, to $45.6 million compared with $37.0 million in the previous year primarily due to an increase in loan portfolio balance.

Interest income on loans increased $1.1 million, or 9.0%, to $13.8 million in the fourth quarter of 2016 compared with $12.7 million in the previous quarter and increased $3.0 million, or 27.3%, compared with $10.8 million in the year-ago quarter. The average total loan balance, including loan held for sale, was $1,040.8 million in the fourth quarter of 2016 compared with $978.5 million in the previous quarter, and $825.9 million in the year-ago quarter. Interest income on loans in 2016 increased $8.9 million, or 21.6%, to $50.1 million compared with $41.2 million in the previous year. Average gross loan balance was $961.5 million in 2016 compared with $800.2 million in the previous year.

The loan yield increased 12 basis points to 5.27% in the fourth quarter of 2016 compared with 5.15% in the previous quarter, and increased 7 basis points compared with 5.20% in the year-ago quarter. Loan yields for 2016 increased 7 basis points to 5.21% compared with 5.14% in 2015. The increase compared with the previous year was primarily due to the “asset sensitive” balance sheet where the variable interest rate loans repriced to a higher rates as a result of the 0.25% increase in Wall Street Journal Prime rate in December 2015 and December 2016.

Below is a table of fixed and variable interest rate loans accompanied with weighted average contractual rates:

  December 31, 2016   September 30, 2016   December 31, 2015
  WAVG   WAVG   WAVG
% to Gross Contractual % to Gross Contractual % to Gross Contractual
Loans * Rate Loans * Rate Loans * Rate
Fixed rate loans 30.9% 5.10% 31.3% 5.10% 37.8% 5.10%
Variable rate loans 69.1% 4.68% 68.7% 4.44% 62.2% 4.53%
* Including LHFS

The interest income on investment securities increased $62,000, or 16.6%, to $428,000 compared with $367,000 in the previous quarter, but decreased $47,000, or 9.9%, compared with $475,000 in the year-ago quarter. The fluctuation compared with the previous quarter and the year-ago quarter was primarily due to the fluctuations in investment portfolio balance. The average balance of investment securities was $95.7 million in the fourth quarter of 2016 compared with $88.0 million in the previous quarter, and $98.3 million in the year-ago quarter. Interest income on investment securities in 2016 increased $321,000, or 22.6%, to $1.7 million compared with $1.4 million in the previous year due to an increase of $15.4 million in average balance.

Total interest expense in the fourth quarter of 2016 increased $206,000, or 11.4%, to $2.0 million compared with $1.8 million in the previous quarter and increased $392,000, or 24.2%, compared with $1.6 million in the year-ago quarter. The increase was primarily due to an increase in average balance of interest bearing deposits. The average balance of interest bearing deposits was $798.4 million in the fourth quarter of 2016 compared with $745.6 million in the previous quarter, and $689.6 million in the year-ago quarter. The cost of interest-bearing deposits was 1.00% in the fourth quarter of 2016 compared with 0.96% in the previous quarter, and 0.93% in the year-ago quarter. Total interest expenses in 2016 increased $783,000, or 12.6%, to $7.0 million compared with $6.2 million in 2015 primarily due to an increase of $72.9 million in average balance of interest bearing deposits.

The cost of total deposits including non-interest bearing deposits was 0.74% in the fourth quarter of 2016 compared with 0.70% in the previous quarter, and 0.68% in the year-ago quarter.

Net interest margin was 4.16% in the fourth quarter of 2016 compared with 4.05% in the previous quarter, and 3.82% in the year-ago quarter. The increase in net interest margin in the 2016 fourth quarter compared with the previous quarter and the year-ago quarter was primarily due to an increase in yield on interest earning assets. Yield on interest earning assets increased 14 basis points to 4.84% from 4.70% in the previous quarter and increased 39 basis points from 4.45% in the year-ago quarter. Net interest margin increased 29 basis points to 4.14% in 2016 compared with 3.85% in 2015.

Loan Loss Provision

The provision for loan losses in the fourth quarter of 2016 decreased $181,000 to $621,000 compared with $802,000 in the previous quarter, and increased $189,000 compared with $432,000 in the year-ago quarter primarily due to an increase in the loan portfolio balance and an increase in the loss look back period in calculating the loan loss reserve balance. The allowance for loan losses to gross loan ratio was 1.10% at December 31, 2016 compared with 1.11% at September 30, 2016 and 1.11% at December 31, 2015. In 2016, the Company recorded $2.3 million in provision for loan losses compared with $412,000 in 2015.

During the fourth quarter of 2016, the Company recognized a net charge-off of $293,000 compared with a net recovery of $3,000 in the previous quarter, and a net charge-off of $285,000 in the year-ago quarter. In 2016, the Company recognized a net charge-off of $309,000 compared with $499,000 in 2015.

Non-interest Income

Non-interest income in the fourth quarter of 2016 decreased $373,000, or 9.3%, to $3.6 million compared with $4.0 million in the previous quarter, but increased $508,000, or 16.2%, compared with $3.1 million in the year-ago quarter. The decrease compared to the previous quarter was primarily due to a decrease of $300,000 in gain on sale of SBA and residential home mortgage loans to $2.5 million compared with $2.8 million, and the increase compared to the year-ago quarter was due to an increase of $500,000 in gain on sale of SBA and mortgage loans compared with the year-ago quarter. Non-interest income in 2016 increased $840,000, or 6.6%, to $13.6 million compared with $12.8 million in 2015 primarily due to an increase of $648,000 in gain on sale of SBA and mortgage loans and an increase of $210,000 in loan servicing income.

The Bank originated $28.3 million in SBA loans and sold $38.9 million in the fourth quarter of 2016 compared with $39.0 million in origination and $34.5 million sold during the previous quarter, and $41.9 million in origination and sold $33.7 million during the year-ago quarter. The Bank originated $18.4 million in residential mortgage loans and sold $4.4 million in the fourth quarter of 2016 compared with $29.5 million in origination and sold $21.9 million in the previous quarter and $18.5 million in origination and sold $1.8 million in the year-ago quarter.

Non-interest Expenses

Non-interest expenses in the fourth quarter of 2016 decreased $461,000, or 5.4%, to $8.1 million compared with $8.5 million in the previous quarter, but increased $525,000, or 7.0%, compared with $7.5 million in the year-ago quarter. The decrease compared with the previous quarter was primarily due to a decrease of $442,000 in salary and benefits expenses related to the reversal of some bonus accrual. The increase compared with the year-ago quarter was primarily due to an increase of $580,000 in salary and employee benefits expenses resulting from an increase in headcount in conjunction with asset growth and an increase of $185,000 in occupancies and fixed assets expenses, partially offset by a decrease of $169,000 in legal and professional expenses.

Non-interest expenses for 2016 increased $4.2 million, or 14.8%, to $32.5 million compared with $28.3 million in 2015 primarily due to an increase of $3.1 million in employee salaries and benefits, an increase of $717,000 in occupancies and fixed assets, and an increase of $175,000 in marketing expenses. The increases in non-interest expenses were attributable to the opening of a new full-service branch in Fort Lee, New Jersey in August 2015, opening of two new full-service branches in Los Angeles, California in August 2016, and relocation of headquarter office to a larger space in December 2015 to accommodate growth in the number of employees.

The Company’s efficiency ratio was 49.75% in the fourth quarter of 2016 compared with 55.37% in the previous quarter, and 58.08% in the year-ago quarter. The Company’s efficiency ratio for 2016 was 54.92% compared with 56.84% in 2015.

Income Tax Provision

The Company’s effective income tax rate was 42.75% in the fourth quarter of 2016 compared with 42.70% in the previous quarter and 42.09% in the year-ago quarter. The Company’s effective income tax rate in 2016 was 42.62% compared with 42.21% in 2015.

BALANCE SHEET SUMMARY

Total Assets

Total assets at December 31, 2016 increased $49.4 million, or 4.2%, to $1,226.6 million compared with $1,177.2 million at September 30, 2016, and increased $184.1 million, or 17.7%, compared with $1,042.5 million at December 31, 2015.

Loans

Total loans receivable including loan held-for-sale, net of deferred costs and fees, increased $21.7 million, or 2.1%, to $1,033.3 million at December 31, 2016 compared with $1,011.5 million at September 30, 2016, and increased $187.0 million, or 22.1%, compared with $846.3 million at December 31, 2015.

During the fourth quarter of 2016, the Company originated $118.7 million in loans, sold $38.9 million in SBA and $4.4 million in residential mortgage loans, recognized $52.3 million in loan principal paydown/payoff, and charged-off $386,000. During the fourth quarter of 2015, loan origination was $144.8 million, sale of SBA loans were $33.7 million, sale of mortgage loans were $1.8 million, principal paydown/payoff were $73.6 million, and principal charge-off was $380,000.

In 2016, the Company originated $588.2 million in loans, sold $119.3 million in SBA and $45.3 million in residential mortgage loans, and recognized $234.3 million of pay-down/pay-off. In 2015, loan origination was $470.0 million, sale of SBA loans were $104.8 million, sale of mortgage loans were $51.7 million, principal paydown/payoff were $209.5 million, and principal charge-off was $1.3 million.

The following table illustrates details of gross loan balance by type:

Loan type (dollars in thousands)
  Dec. 31,   Sept. 30,   Percentage   Dec. 31,   Percentage
2016 2016 Change 2015 Change
Real estate loans $ 612,301 $ 592,233 3.4% $ 487,545 25.6%
Residential mortgage loans 140,688 126,637 11.1% 129,508 8.6%
SBA loans 130,577 130,049 0.4% 112,397 16.2%
Commercial industrial loans 113,642 105,615 7.6% 85,692 32.6%
Consumer loans 33,722 32,630 3.3% 29,134 15.7%
Deferred loan fees/costs   181   303 -40.3%   93 94.6%
Gross loans receivables 1,031,111 987,467 4.4% 844,369 22.1%
Loans held for sale   2,150   24,074 -91.1%   1,941 10.8%
Total loans $ 1,033,261 $ 1,011,541 2.1% $ 846,310 22.1%

Investment Securities

Total investment securities at December 31, 2016 increased $12.5 million, or 14.2%, to $100.4 million compared with $88.0 million at September 30, 2016, and decreased $1.8 million, or 1.7%, compared with $102.2 million at December 31, 2015. The increase in investment securities portfolio compared with the previous quarter was primarily due to the purchase of $18.8 million in investment securities, partially offset by $4.5 million in principal pay-downs, $190,000 in net premium amortization, and $1.7 million decline in fair market value.

Deposits

Total deposit balance increased $46.8 million, or 4.5%, to $1,091.8 million at December 31, 2016 compared with $1,045.0 million at September 30, 2016, and increased $152.4 million, or 16.2%, compared with $939.4 million at December 31, 2015. The demand deposit to total deposit ratio was 25.1% at December 31, 2016 compared with 26.5% at September 30, 2016, and 28.5% at December 31, 2015.

The table below consists of deposit mix by period:

Deposit mix (Dollars in thousands)
  December 31, 2016   September 30, 2016   December 31, 2015
Amount   Percentage Amount   Percentage Amount   Percentage
Demand deposits $ 274,003 25.1% $ 276,523 26.5% $ 267,934 28.5%
Now accounts 7,837 0.7% 7,306 0.7% 7,945 0.8%
Money market accounts 303,233 27.8% 264,557 25.3% 223,471 23.8%
Savings 8,858 0.8% 9,750 0.9% 8,263 0.9%
Time deposits under $250K 252,491 23.1% 246,849 23.6% 232,034 24.7%
Time deposits of $250K and over 127,624 11.7% 119,602 11.4% 108,791 11.6%
State & Broker CDs   117,766 10.8%   120,416 11.5%   91,001 9.7%
Total deposits $ 1,091,812 100.0% $ 1,045,003 100.0% $ 939,439 100.0%

Stockholders’ Equity

On August 5, 2016, the Company raised $15.3 million in new capital through a private placement by issuing Company’s common stocks. The proceed is being used for general corporate purposes and supporting the asset growth of Pacific City Bank.

On December 13, 2016, the Company announced 10% stock dividend on the Company’s common stocks. The stock dividend is payable on January 17, 2017 to common shareholder of record on December 30, 2016. In accordance with Accounting Research Bulletins 43 (ARB 43), this stock dividend is considered as a small stock dividend and $12.6 million in retained earnings was transferred to common stock, which did not have any effect on the total stockholders’ equity balance.

The Stockholders’ equity increased $3.2 million, or 2.6%, to $127.0 million at December 31, 2016 compared with $123.8 million at September 30, 2016, and increased $29.0 million, or 29.5%, compared with $98.0 million at December 31, 2015.

CREDIT QUALITY

Non-performing Assets

Non-performing loans (“NPL”) balance at December 31, 2016 decreased $266,000 to $1.8 million compared with $2.1 million at September 30, 2016, and decreased $524,000 compared with $2.4 million at December 31, 2015. Non-performing loans to gross loans ratios were 0.18% at December 31, 2016 compared with 0.21% at September 30, 2016 and 0.28% at December 31, 2015.

The OREO balance of $506,000 at December 31, 2016 did not change from September 30, 2016, and there were no OREO balance at December 31, 2015.

The following tables summarize composition of non-performing loans and non-performing assets:

Non-performing loans composition (Dollars in thousands)
         
Dec. 31, Sept. 30, Percentage Dec. 31, Percentage
2016 2016 Change 2015 Change
Real estate loans $ 57 $ 63 -9.5% $ 79 -27.8%
Commercial and industrial loans 284 530 -46.4% 706 -59.8%
SBA loans 1,468 1,486 -1.2% 1,552 -5.4%
Consumer loans & others   39   35 11.4%   35 11.4%
$ 1,848 $ 2,114 -12.6% $ 2,372 -22.1%
 
Non-performing assets (Dollars in thousands)
         
Dec. 31, Sept. 30, % Dec. 31, %
  2016     2016   Change   2015   Change
Non-performing loans (NPL) $ 1,848 $ 2,114 -12.6% $ 2,372 -22.1%
Non-performing TDR (included in NPL) $ 663 $ 1,176 -43.6% $ 1,562 -57.6%
Gross loans including deferred loan fees/cost $ 1,031,112 $ 987,467 4.4% $ 844,369 22.1%
NPL/Gross loans 0.18 % 0.21 % 0.28 %
OREO $ 506 $ 506 0.0% $ - N/A
Performing TDR $ 2,196 $ 2,244 -2.1% $ 2,524 -13.0%
NPA (NPL+OREO) $ 2,353 $ 2,619 -10.2% $ 2,372 -0.8%
Total assets $ 1,226,642 $ 1,177,214 4.2% $ 1,042,517 17.7%
 
NPA (NPL+OREO)/Gross loans 0.23 % 0.27 % 0.28 %
NPA (NPL+OREO)/Total assets 0.19 % 0.22 % 0.23 %

Classified Assets

Classified loans at December 31, 2016 increased $1.7 million to $9.1 million compared with $7.4 million at September 30, 2016 and increased $2.5 million compared with $6.5 million at December 31, 2015. Classified assets to total assets ratio was 0.78% at December 31, 2016 compared with 0.67% at September 30, 2016 and 0.63% at December 31, 2015.

The following tables provide certain detail on classified loans and classified assets.

Classified loans (Dollars in thousands)
  Dec. 31   Sept. 30,   Percentage   Dec. 31,   Percentage
2016 2016 Change 2015 Change
Substandard (Classified) $ 9,065 $ 7,403 22.5% $ 6,537 38.7%
Special mention   5,842   6,659 -12.3%   6,158 -5.1%
Total criticized 14,907 14,062 6.0% 12,695 17.4%
 
Watch   8,692   8,746 -0.6%   17,493 -50.3%
Total problem loans $ 23,599 $ 22,808 3.5% $ 30,188 -21.8%
 
Classified assets (Dollars in thousands)
         
Dec. 31, Sept. 30, % Dec. 31, %
  2016     2016   Change   2015   Change
Classified assets $ 9,571 $ 7,909 21.0% $ 6,537 46.4%
Classified loans/Gross loans 0.88 % 0.75 % 0.77 %
Tier 1 + ALLL $ 136,954 $ 133,638 2.5% $ 107,340 27.6%
Classified assets/Tier 1 + ALLL 6.99 % 5.92 % 6.09 %
Classified assets/Total assets 0.78 % 0.67 % 0.63 %

Capital

The following table illustrates Pacific City Bank capital ratios:

Capital Ratios
     
December 31, 2016 September 30, 2016 December 31, 2015
Tier 1 Leverage Capital Ratio (Bank) 10.38% 10.58% 9.25%
Common Equity Tier 1 Capital Ratio (Bank) 12.35% 12.29% 12.07%
Tier 1 Risk-Based Capital Ratio (Bank) 12.35% 12.29% 12.07%
Total Risk-Based Capital Ratio (Bank) 13.48% 13.42% 13.25%

About Pacific City Financial Corporation

Headquartered in Los Angeles, California, Pacific City Financial Corporation is the parent company of Pacific City Bank, a full-service commercial bank with twelve branch offices and eight loan production offices in Lynwood and Bellevue, Washington; Denver, Colorado; Chicago, Illinois; Annandale, Virginia; Atlanta, Georgia; Orange County, California; and Bayside, New York. Pacific City Bank specializes in commercial banking for small to medium-size businesses by providing commercial real estate loans, small business loans and lines of credit, trade finance loans, auto loans, residential mortgage loans, and SBA loans. Pacific City Bank serves a diverse customer base through its branches in the Greater Los Angeles Area and Fort Lee, New Jersey and its Loan Production Offices in seven States.

Safe Harbor Statement

This press release may contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from the projected, including descriptions of plans or objectives of its management for future operations, products or services, and forecasts of its revenues, earnings or other measures of economic performance. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.”

Pacific City Financial Corporation
Consolidated Balance Sheets (Unaudited)
(Dollars In thousands)
         
December 31, September 30, % December 31, %
  2016     2016   change   2015   change
Assets
Cash and due from banks $ 18,488 $ 18,680 -1.0% $ 13,511 36.8%
Interest-bearing deposits in financial institutions   51,463     36,417   41.3%   63,439   -18.9%
Total cash and cash equivalents   69,951     55,097   27.0%   76,950   -9.1%
 
Investment securities, available-for-sale 82,838 72,481 14.3% 84,847 -2.4%
Investment securities, held-to-maturity   17,584     15,486   13.5%   17,337   1.4%
Total investment securities   100,422     87,967   14.2%   102,184   -1.7%
 
Loans held for sale 2,150 24,074 -91.1% 1,941 10.8%
 
Loans receivable, net of deferred loan costs (fees) 1,031,112 987,467 4.4% 844,369 22.1%
Less: allowance for loan losses   (11,320 )   (10,991 ) 3.0%   (9,345 ) 21.1%
Net loans receivables   1,019,792     976,476   4.4%   835,024   22.1%
 
Premises and equipment, net 4,563 4,392 3.9% 3,613 26.3%
Other real estate owned, net 506 506 0.0% - NA
Federal Home Loan Bank and other bank stock 5,686 5,686 0.0% 4,922 15.5%
Deferred tax assets, net 5,254 6,527 -19.5% 5,195 1.1%
Servicing assets 8,302 7,988 3.9% 7,405 12.1%
Accrued interest receivables 3,150 2,706 16.4% 2,590 21.6%
Others   6,867     5,795   18.5%   2,693   155.0%
Total assets $ 1,226,643   $ 1,177,214   4.2% $ 1,042,517   17.7%
 
Liabilities
Deposits
Noninterest-bearing demand $ 274,003 $ 276,523 -0.9% $ 267,934 2.3%
Savings, NOW, and money market accounts 319,929 281,614 13.6% 239,679 33.5%
Time deposits under $250,000 291,557 288,565 1.0% 256,235 13.8%
Time deposits of $250,000 and over   206,323     198,302   4.0%   175,591   17.5%
Total deposits   1,091,812     1,045,004   4.5%   939,439   16.2%
Accrued interest payable 1,559 1,102 41.5% 1,417 10.0%
Other liabilities   6,265     7,332   -14.6%   3,621   73.0%
Total liabilities $ 1,099,636   $ 1,053,438   4.4% $ 944,477   16.4%
 
Capital
Common stock 125,093 121,001 3.4% 96,074 30.2%
Additional paid in capital 2,444 2,320 5.3% 2,362 3.5%
Retained earnings - - NA - NA
Other comprehensive income (loss)   (530 )   455   -216.5%   (396 ) 33.8%
Total capital   127,007     123,776   2.6%   98,040   29.5%
 
Total liabilities & capital $ 1,226,643   $ 1,177,214   4.2% $ 1,042,517   17.7%
 
Pacific City Financial Corporation
Consolidated Income Statements (Unaudited)
(Dollars in thousands, except share and per share data)
 
  Three Months Ended
Dec. 31,   Sept. 30,   Percentage   Dec. 31,   Percentage
2016 2016 Change 2015 Change
Interest income
Interest and fees on loans $ 13,793 $ 12,655 9.0% $ 10,831 27.3%
Interest on investments 428 367 16.6% 475 -9.9%
Interest on others   368   172 114.0%   168 119.0%
Total interest income   14,589   13,194 10.6%   11,474 27.1%
 
Interest expense
Interest on deposits   2,010   1,804 11.4%   1,618 24.2%
Total interest expenses   2,010   1,804 11.4%   1,618 24.2%
 
Net interest income 12,579 11,390 10.4% 9,856 27.6%
 
Provision for loan losses (PLL) 621 802 -22.6% 432 43.8%
 
Net interest income after PLL   11,958   10,588 12.9%   9,424 26.9%
 
Non-interest income
Gain on sale of SBA loans 2,427 2,392 1.5% 2,018 20.3%
Gain on sale of residential mortgage loans 52 390 -86.7% 12 333.3%
Service charges on deposits 369 367 0.5% 345 7.0%
Loan servicing fees 505 567 -10.9% 408 23.8%
Other   292   302 -3.3%   354 -17.5%
Total non-interest income   3,645   4,018 -9.3%   3,137 16.2%
 
Non-interest expense
Employee salaries & benefits 4,901 5,342 -8.3% 4,321 13.4%
Occupancies and fixed assets 1,150 1,079 6.6% 964 19.3%
Legal & professional 651 594 9.6% 820 -20.6%
FDIC assessment 50 138 -63.8% 134 -62.7%
Marketing expenses 269 349 -22.9% 316 -14.9%
Data and item processing expenses 241 237 1.7% 220 9.5%
Loan related expenses 70 148 -52.7% 117 -40.2%
Others   739   645 14.6%   654 13.0%
Total non-interest expenses   8,071   8,532 -5.4%   7,546 7.0%
 
Net income before taxes 7,532 6,074 24.0% 5,015 50.2%
 
Income tax provision   3,220   2,594 24.1%   2,111 52.5%
 
Net income $ 4,312 $ 3,480 23.9% $ 2,904 48.5%
 
 
Earnings per common shares
 
Basic $ 0.32 $ 0.27 $ 0.24
Diluted $ 0.32 $ 0.27 $ 0.24
 
Average shares outstanding
 
Basic 13,386,503 12,889,986 11,858,522
Diluted 13,461,260 12,955,295 11,950,804
 
Pacific City Financial Corporation
Consolidated Income Statements (Unaudited)
(Dollars in thousands)
 
  Twelve Months Ended
    Amount   Percentage
December 31, 2016 December 31, 2015 Change Change
Interest income
Interest and fees on loans $ 50,058 $ 41,162 8,896 21.6%
Interest on investments 1,741 1,420 321 22.6%
Interest on others   796   689 107   15.5%
Total interest income   52,595   43,271 9,324   21.5%
 
Interest expenses
Interest on deposits 7,009 6,231 778 12.5%
Interest on borrowings   5   - 5   NA
Total interest expenses   7,014   6,231 783   12.6%
 
Net interest income 45,581 37,040 8,541 23.1%
 
Provision for loan losses (PLL) 2,283 412 1,871 454.1%
 
Net interest income after PLL   43,298   36,628 6,670   18.2%
 
Non-interest income
Gain on sale of SBA loans 8,079 7,288 791 10.9%
Gain on sale of HM loans 833 976 (143 ) -14.7%
Service charges on deposits 1,457 1,454 3 0.2%
Loans servicing fees 2,159 1,949 210 10.8%
Other   1,091   1,112 (21 ) -1.9%
Total non-interest income   13,619   12,779 840   6.6%
 
Non-interest expenses
Employee salaries & benefits 19,944 16,888 3,056 18.1%
Occupancies and fixed assets 4,337 3,620 717 19.8%
Legal & professional 2,706 2,624 82 3.1%
FDIC assessment 460 501 (41 ) -8.2%
Marketing expenses 1,246 1,071 175 16.3%
Data and item processing expenses 943 872 71 8.1%
Loan related expenses 344 517 (173 ) -33.5%
Others   2,534   2,227 307   13.8%
Total non-interest expenses   32,514   28,320 4,194   14.8%
 
Net income before tax   24,403   21,087 3,316   15.7%
 
Income tax provision   10,401   8,901 1,500   16.9%
 
Net income after tax $ 14,002 $ 12,186 1,816   14.9%
 
Earnings per common shares
Basic $ 1.12 $ 1.03
Diluted $ 1.11 $ 1.02
 
Average shares outstanding
Basic 12,532,807 11,840,528
Diluted 12,607,990 11,929,503
 
Pacific City Financial Corporation
Average Balance, Average Yield, and Average Rate
(Dollars in thousands)
 
  Three Months Ended
December 31, 2016   September 30, 2016   December 31, 2015
  Interest   Average   Interest   Average   Interest   Average
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate Balance Expense Rate
Assets
Interest-earning assets:
Gross loans, net of deferred loan fees $ 1,040,783 $ 13,793 5.27% $ 978,519 $ 12,655 5.15% $ 825,871 $ 10,831 5.20%
US government agencies 20,298 112 2.21% 18,336 96 2.09% 21,350 115 2.16%
Mortgage backed securities 46,629 187 1.60% 43,793 164 1.50% 47,334 239 2.02%
Collateralized mortgage obligation 20,775 89 1.71% 18,417 72 1.56% 22,358 87 1.55%
Muni bonds 8,037 41 2.06% 7,425 35 1.89% 7,256 34 1.89%
Interest bearing deposit & others   35,561     49 0.55%   40,254     50 0.50%   88,299     62 0.28%
Total interest-earning assets $ 1,172,083   $ 14,270 4.84% $ 1,106,744   $ 13,072 4.70% $ 1,012,469   $ 11,369 4.45%
Noninterest-earning assets:
Cash and cash equivalents $ 16,479 $ 16,708 $ 14,755
Allowances for loan losses (11,212 ) (10,449 ) (9,233 )
Other assets   33,864     33,497     25,049  
$ 39,131   $ 39,756   $ 30,571  
 
Total assets $ 1,211,214   $ 1,146,500   $ 1,043,040  
 
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Money market & NOW accounts $ 296,593 $ 712 0.95% $ 252,014 $ 572 0.90% $ 233,850 $ 504 0.86%
Savings 8,880 6 0.27% 10,209 7 0.27% 7,675 6 0.31%
Time deposits   492,909     1,292 1.04%   483,334     1,225 1.01%   448,029     1,108 0.98%
Total interest-bearing deposits $ 798,382   $ 2,010 1.00% $ 745,557   $ 1,804 0.96% $ 689,554   $ 1,618 0.93%
Borrowings:
Other borrowings   -     - NA   -     - NA   -     - NA
$ -   $ - NA $ -   $ - NA $ -   $ - NA
 
Total interest-bearing liabilities $ 798,382   $ 2,010 1.00% $ 745,557   $ 1,804 0.96% $ 689,554     1,618 0.93%
Noninterest-bearing liabilities:
Demand deposits $ 278,001 $ 273,723 $ 250,761
Other liabilities   8,646     9,496     5,308  
$ 286,647   $ 283,219   $ 256,069  
 
Total liabilities $ 1,085,029   $ 1,028,776   $ 945,623  
 
Stockholders' equity $ 126,185   $ 117,724   $ 97,417  
 
Total liabilities and stockholders' equity $ 1,211,214   $ 1,146,500   $ 1,043,040  
 
Net interest income $ 12,260 $ 11,268 $ 9,751
 
Cost of funds0.74%0.70%0.68%
 
Net interest spread3.84%3.74%3.52%
 
Net interest margin4.16%4.05%3.82%
 
Pacific City Financial Corporation
Average Balance, Average Yield, and Average Rate
(Dollars in thousands)
 
  Twelve Month Ended
December 31, 2016   December 31, 2015
  Interest   Average   Interest   Average
Average Income/ Yield Average Income/ Yield
Balance Expense Rate Balance Expense Rate
Assets
Interest-earning assets:
Gross loans, net of deferred loan fees $ 961,482 $ 50,058 5.21% $ 800,151 $ 41,162 5.14%
US government agencies 20,928 460 2.20% 12,919 238 1.84%
Mortgage backed securities 45,822 797 1.74% 40,644 775 1.91%

Collateralized mortgage obligation

21,032 338 1.61% 21,895 328 1.50%
Muni bonds 7,613 147 1.94% 4,502 78 1.74%
Interest bearing deposit & others   28,413     145 0.51%   67,543     176 0.26%
Total interest earning assets $ 1,085,290   $ 51,944 4.79% $ 947,653   $ 42,758 4.51%
 
Noninterest-earning assets:
Cash and cash equivalents $ 15,848 $ 14,470
Allowances for loan losses (10,170 ) (9,444 )
Other assets   31,443     24,588  
Total noninterest-earning assets $ 37,121   $ 29,614  
 
Total assets$1,122,410   $977,267  
 
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Money market & NOW accounts $ 250,736 $ 2,264 0.90% $ 208,981 $ 1,782 0.85%
Savings 9,500 26 0.27% 7,017 21 0.30%
Time deposits   468,953     4,719 1.01%   440,300     4,428 1.01%
Total interest-bearing deposits $ 729,189   $ 7,009 0.96% $ 656,298   $ 6,231 0.95%
Borrowings:
Other borrowings   1,194     5 0.42%   53     0 0.16%
Total borrowings: $ 1,194   $ 5 0.42% $ 53   $ 0 0.16%
 
Total interest-bearing liabilities $ 730,383   $ 7,014 0.96% $ 656,351   $ 6,231 0.95%
Noninterest-bearing liabilities:
Demand deposits $ 271,630 $ 223,170
Other liabilities $ 8,090     4,748  
Total noninterest-bearing liabilities $ 279,720   $ 227,918  
 
Total liabilities $ 1,010,103   $ 884,269  
 
Stockholders' equity $ 112,307   $ 92,998  
 
Total liabilities and stockholders' equity$1,122,410   $977,267  
 
Net interest income $ 44,931 $ 36,528
 
Cost of deposits0.70%0.71%
 
Net interest spread3.83%3.56%
 
Net interest margin4.14%3.85%