Plaza Bancorp, the Holding Company of Plaza Bank, Announces Financial Results for the Second Quarter Ended June 30, 2016 (Unaudited)

IRVINE, CA — (July 18, 2016) – Plaza Bancorp (OTCBB: PLZZ) (the “Company”), the holding company of Plaza Bank (the “Bank”), reported unaudited net income for the quarter ended June 30, 2016 of $3.0 million or $0.10 per share on a diluted basis compared with $2.3 million, or $0.08 per diluted share for the first quarter of 2016. For the quarter ended June 30, 2016, the Company’s annualized return on average assets was 1.09% and annualized return on average equity was 10.58%, up from an annualized return on average assets of 0.89% and an annualized return on average equity of 8.53% for the first quarter of 2016.

For the first six months of 2016, the Company recorded net income of $5.3 million, or $0.17 per diluted share. This compares with a net loss, using the pooling-of-interest method to account for the merger of Manhattan Bancorp into Plaza Bancorp, of ($1.2 million), or ($0.04) per diluted share, for the first six months of 2015. For the two quarters ended June 30, 2016, the Company’s annualized return on average assets was 0.99% and annualized return on average equity was 9.57%, up from an annualized loss on average assets of (0.23%) and an annualized loss on average equity of (3.90%) for the first half of 2015.

Gene Galloway, President and Chief Executive Officer of the Company and the Bank, commenting on the one year anniversary of the aforementioned merger, stated “The integration of the cultures of the two banks has been completed and the financial results are starting to show. Loans held for investment have grown 13%, or $111.5 million, during this period on loan volume of $325.6 million. The net income for the last twelve months totaled $10.8 million, or 36 cents per average diluted share.”

Mr. Galloway concluded by discussing the second quarter results, “For the last three months the Company has had consistent earnings averaging a million dollars per month. The earnings are being driven by the robust loan growth and the discipline on our loan pricing which has allowed us to maintain our high net interest margin at the Bank and Bancorp of 4.86% and 4.68%, respectively.”

Highlights for quarter ended June 30, 2016 included:

  • Total revenues increased $741,000, or 4.8%, to $16.2 million for the second quarter of 2016 compared to $15.5 million for the first quarter of 2016
  • Net interest income increased $394,000, or 3.1%, to $12.1 million for the second quarter of 2016 compared to $11.7 million for the first quarter of 2016
  • Loans held for investment grew $37.8 million, or 16.5% annualized, to $956.2 million during the second quarter compared to loan growth of $36.4 million, or 16.4% annualized for the first quarter of 2016
  • Loan originations by the Bank in the second quarter totaled $83.9 million, a slight decrease of $2.7 million compared to the originations for the first quarter of 2016
  • The Company’s loans held for investment to deposit ratio as of June 30, 2016 was 105.9%
  • During the quarter, the Company realized a gain of $1.2 million on the sale of $17.5 million of SBA 7(a) loans compared to a gain of $732,000 on the sale of $10.5 million of SBA 7(a) loans in the first quarter of 2016
  • The Company’s net interest margin (“NIM”) dipped slightly in the second quarter to 4.68% compared to the prior linked quarter’s NIM of 4.71%
  • Nonperforming assets totaled $1.2 million, or 0.11% of total assets at June 30, 2016 compared to $1.4 million, or 0.13% at March 31, 2016
  • The ratio of allowance for loan losses to total loans held for investment was 1.30% at June 30, 2016. If the $2.5 million credit discount on acquired loans is included in the ratio, the ratio increases to 1.55%
  • The Company’s efficiency ratio for the quarter was 62% compared to the 68% for the first quarter in 2016
  • Tangible book value per diluted share increased $0.11 to $3.45 during the second quarter

 

Net interest income for the quarter ended June 30, 2016 totaled $12.1 million. Loan interest income totaled $13.7 million, the average of total outstanding loans for the quarter was $939.1 million and the annualized yield was 5.76%. Interest expense related to deposits was $1.1 million for the quarter, or 47 basis points annualized. The interest expense related to the subordinated debentures for the quarter was $453,000, or 7.245 % annualized.

The Company recorded a $310,000 provision for loan losses during the second quarter of 2016 principally as a result of the $37.8 million loan growth. For the second quarter, total charge-offs were $6,000 slightly higher than the $5,000 in recoveries. Non-accrual loans totaled $1.0 million at June 30, 2016 of which $511,000 is covered under a FDIC share-loss agreement.

Non-interest income for the second quarter of 2016 was $2.5 million. Non-interest income for the second quarter is primarily comprised of a net gain from the sale of loans of $1.2 million, loan servicing income of $334,000, deposit fee income of $298,000, loan referral fee income of $164,000 and other fee income totaling $555,000.
Non-interest expense totaled $9.3 million for the second quarter of 2016. Compensation and benefits comprises 65.9%, or $6.1 million, of the total non-interest expense. The Company had 159 full-time equivalent employees as of June 30, 2016.

For the second quarter of 2016, the Company’s effective tax rate was 40.9% for a total tax expense of $2.0 million for the quarter.

At June 30, 2016, the Company’s ratio of tangible common equity to total assets was 9.29%, with a tangible book value of $3.75 per diluted share and a diluted book value per share of $3.45 per share.

At June 30, 2016, the Company had a tier 1 leverage capital ratio of 9.12%, common equity tier 1 risk-based capital ratio of 9.76%, tier 1 risk-based capital ratio of 9.76% and total risk-based capital ratio of 13.49%. At June 30, 2016, the Bank exceeded all regulatory capital requirements with a tier 1 leverage capital ratio of 10.97%, common equity tier 1 risk-based capital ratio of 11.74%, tier 1 risked-based capital ratio of 11.74% and total risk-based capital ratio of 12.99%. These capital ratios exceeded the “well capitalized” standards defined by the federal banking regulators of 5.00% for tier 1 leverage capital, 6.5% for common equity tier 1 risk-based capital, 8.00% for tier 1 risk-based capital and 10.00% for total risk-based capital.

 

 

Plaza Bancorp 6/30/2016 3/31/2016 12/31/2015
Tier 1 leverage ratio 9.12% 8.96% 8.56%
Tier 1 risk-based capital ratio 9.76% 9.49% 9.35%
Common equity tier 1 capital ratio 9.76% 9.49% 9.35%
Risk-based capital ratio 13.49% 13.29% 13.24%
Plaza Bank
Tier 1 leverage ratio 10.97% 10.85% 10.48%
Tier 1 risk-based capital ratio 11.74% 11.50% 11.44%
Common equity tier 1 capital ratio 11.74% 11.50% 11.44%
Risk-based capital ratio 12.99% 12.75% 12.70%

About Plaza Bancorp
Plaza Bancorp is the holding company of Plaza Bank. Plaza Bank is a full service community bank serving the business and professional communities in Southern California and Southern Nevada. The Bank is committed to meeting the financial needs of small to middle market businesses and professional firms with loans for working capital, equipment and owner-occupied commercial real estate financing and a full array of cash management services. Plaza Bank meets its customers’ needs through its eight regional offices located in the cities of El Segundo, Glendale, Irvine, Las Vegas, Manhattan Beach, Montebello, Pasadena and San Diego. For more information, visit www.plazabank.com or call President and CEO Gene Galloway at (949) 502-4309 or (702) 277-2221.

Forward-Looking Statements
Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are subject to the safe harbors created by that Act. 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.” Forward-looking statements are based on currently available information, expectations, assumptions, projections, and management’s judgment about the Company, the Bank, the banking industry and general economic conditions. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. Future events are difficult to predict, and the expectations described above are necessarily subject to risk and uncertainty that may cause actual results to differ materially and adversely.

Forward-looking statements involve significant risks and uncertainties and actual results may differ materially from those presented, either expressed or implied, in this press release. Factors that might cause such differences include, but are not limited to: the Bank’s ability to successfully execute its business plans and achieve its objectives; changes in general economic, real estate and financial market conditions, either nationally or locally in areas in which the Bank conducts its operations; changes in interest rates; new litigation or claims or changes in existing litigation or claims; future credit loss experience; increased competitive challenges and expanding product and pricing pressures among financial institutions; legislation or regulatory changes which adversely affect the Bank’s operations or business; loss of key personnel; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies; and the ability to satisfy requirements related to the Sarbanes-Oxley Act and other regulation on internal control.Plaza Bancorp, the Holding Company of Plaza Bank, Announces Financial Results for the Second Quarter Ended June 30, 2016 (Unaudited)

 

Plaza Bancorp
Consolidated Condensed Statements of Financial Condition
(Unaudited)
(dollars in thousands) June 30, December 31, June 30,
ASSETS 2016 2015 2015 *
Cash and cash equivalents $92,203 $97,576 $117,342
Investment securities – available for sale 28,467 28,215 34,308
Loans held for sale 2,720 4,535 6,861
Loans held for investment 956,229 882,199 844,694
Allowance for possible credit losses (12,411) (11,506) (10,156)
Net loans held for investment 943,818 870,693 834,538
Goodwill and other intangibles 12,266 12,411 12,527
Idemnification asset 519 762 1,466
Accrued interest and other assets 34,020 36,540 59,208
TOTAL ASSETS $1,114,013 $1,050,732 $1,066,250
LIABILITIES AND EQUITY
Deposits
Noninterest-bearing demand $270,000 $316,516 $292,231
Savings, now and money market accounts 396,277 355,515 341,752
Time deposits 236,617 211,998 231,137
     Total Deposits 902,894 884,029 865,120
Borrowings 89,712 48,696 58,700
Accrued interest and other liabilities 8,622 10,738 42,678
     Total Liabilities 1,001,228 943,463 966,498
Total stockholder’s equity 112,785 107,269 99,752
TOTAL LIABILITIES AND EQUITY $1,114,013 $1,050,732 $1,066,250
BASIC BOOK VALUE PER SHARE $3.75 $3.57 $3.37
TANGIBLE BOOK VALUE PER DILUTED SHARE $3.42 $3.22 $2.98
BASIC SHARES OUTSTANDING AT PERIOD END 30,039,244 30,034,244 29,558,103
DILUTED SHARES OUTSTANDING AT PERIOD END 30,228,651 30,296,867 30,038,919
Capital Ratios End of Period:
Tier 1 leverage ratio 9.12% 8.56% 7.51%
Tier 1 risk-based capital ratio 9.76% 9.35% 8.30%
Common equity tier 1 capital ratio 9.76% 9.35% 8.30%
Risk-based capital ratio 13.49% 13.24% 12.06%
*Pooling of Interest with Manhattan Bancorp effected in June 2015
Plaza Bancorp
Consolidated Condensed Statements of Operations
For the Quarter
(Unaudited)
Quarter-to-Date Quarter-to-Date Year-to-Date Year-to-Date
June 30, June 30, June 30, June 30,
2016 2015 * 2016 2015 *
(dollars in thousands)
Interest income $13,685 $13,263 $26,868 $26,051
Interest expense 1,598 1,030 3,088 2,099
Net Interest Income 12,087 12,233 23,780 23,952
Provisions for loan losses 310 469 897 730
Net interest income after
Provisions for Loan Losses 11,777 11,764 22,883 23,222
Noninterest income 2,525 2,326 4,811 4,262
Noninterest expense 9,304 12,720 19,017 23,734
Income before income taxes 4,998 1,370 8,677 3,750
Provisions for income taxes 2,043 188 3,399 1,003
Income from continuing operations 2,955 1,182 5,278 2,747
Gain (Loss) on discontinued operations (1,844) (3,616)
Net income (loss) before noncontrolling interest in Plaza Bank 2,955 (662) 5,278 (869)
Less: Net income attributed to noncontrolling interst in Plaza Bank (170) (336)
Net income (loss) $2,955 $(832) $5,278 $(1,205)
EARNINGS (LOSS) PER SHARE – BASIC $0.10 $(0.03) $0.18 $(0.04)
EARNINGS (LOSS) PER SHARE – DILUTED $0.10 $(0.03) $0.17 $(0.04)
BASIC WEIGHTED AVERAGE SHARES 30,038,145 29,448,684 30,036,195 29,448,684
DILUTED WEIGHTED AVERAGE SHARES 30,237,144 30,320,030 30,243,181 30,020,030
RETURN ON AVERAGE ASSETS 1.09% -0.31% 0.99% -0.23%
RETURN ON AVERAGE EQUITY 10.58% -2.87% 9.57% -3.90%
*Pooling of Interest with Manhattan Bancorp effected in June 2015
Plaza Bancorp
Loans Held for Investment Portfolio Composition
June 30, December 31, June 30,
2016 2015 2015
(dollars in thousands)
Construction and land development $15,259 $12,906 $13,570
Commercial real estate and other 569,246 522,739 504,254
Commercial 174,547 162,485 166,674
Residential real estate 138,647 131,051 110,370
Consumer 62,482 56,656 52,930
Total 960,181 885,837 847,798
Allowance for loan losses (12,411) (11,506) (10,156)
Deferred loan fees and discounts, net of costs (3,952) (3,638) (3,106)
Total net loans $943,818 $870,693 $834,536
Non-Performing Assets
June 30, December 31, June 30,
2016 2015 2015
(dollars in thousands)
Non-Accrual Assets
Loans (net of discounts) $866 $1,236 $1,779
OREO 206 206 206
Delinquency Loans (net of discounts)
30 – 89 Days past due $492 $3,487 $2,885
90 days and greater 435 109 109