Pacific Union Bank Reports 21.1% Increase in First Quarter Net
Income LOS ANGELES, April 16 /PRNewswire-FirstCall/ -- PACIFIC
UNION BANK , a community bank primarily focusing on the Korean
American market, announced today its results for the quarter ended
March 31, 2004. Strong Financial Performance First Quarter 2004
First Quarter 2003 Reported Results Reported Results Net Income
$3.3 million $2.7 million Diluted earning per share $0.30 $0.25
Return on average assets 1.14% 1.11% Return on average equity
11.71% 10.71% Efficiency ratio 54.92% 54.86% First Quarter 2004
Highlights: * First quarter of 2004 net income increased $575,000
or 21.1% to $3.3 million compared to $2.7 million for the same
quarter of 2003. * Deposits increased $160.4 million or 18.6% to
$1.0 billion at March 31, 2004 compared to $863.0 million at
December 31, 2003. * Non-performing assets ("NPA") decreased
$165,000 or 8.3% to $2.0 million at March 31, 2004 compared to $2.2
million at March 31, 2003. * Net recoveries were $145,000 in the
first quarter of 2004 compared to net charge-offs of $169,000 for
the same quarter of 2003. * The annualized ROA for the three months
ended March 31, 2004 was 1.14% compared to 1.11% for the
corresponding period of 2003. * The annualized ROE for the three
months ended March 31, 2004 was 11.71% compared to 10.71% for the
corresponding period of 2003. Commenting on the first quarter of
2004, David Warner, the Bank's President and Chief Executive
Officer said, "We are pleased that our entire organization was able
to maintain its focus on our core banking business and deliver
another quarter of strong financial performance as we prepare for
our merger with Hanmi Financial. "We have also been maintaining
close contact with our valued customers and communicating with them
about the enhanced services and capabilities that the combination
of Pacific Union and Hanmi Financial will be able to offer them. We
continue to concentrate on growing our banking business as
opportunities arise while at the same time preparing our customers
and employees for a smooth transition once the merger is
completed," said Mr. Warner. INCOME STATEMENT REVIEW Net Income Net
income for the three months ended March 31, 2004 increased $575,000
or 21.1% to $3.3 million, compared to $2.7 million for the same
period of 2003. The earnings per diluted share increased by 20.0%
to $0.30 for the three months ended March 31, 2004 compared to
$0.25 for the corresponding period of 2003. The annualized return
on average assets ratio and return on average equity for the three
months ended March 31, 2004 were 1.14% and 11.71%, respectively.
The annualized ROA and ROE for the corresponding period in 2003
were 1.11% and 10.71%, respectively. Net Interest Income before
Provision for Loan Losses During the first quarter of 2004, net
interest income before the provision for loan losses increased by
$1.7 million or 19.6% to $10.2 million compared to $8.5 million for
the same period of 2003, reflecting the growth in average net loans
including loans held-for-sale totaling $173.7 million. Total
interest income for the first quarter of 2004 increased by $2.0
million or 16.9% to $13.8 million, compared to $11.8 million in the
same period of 2003. The increase in interest income resulted
primarily from the volume increase in average interest-earning
assets which was partially offset by rate decreases in average
interest-earning assets. Average interest-earning assets increased
by $177.4 million or 19.0% to $1.1 billion in the first quarter of
2004, compared to $933.3 million in the same quarter of 2003. The
increase of $177.4 million in average interest-earning assets was
mainly attributable to a $173.7 million or 25.1% increase in
average net loans. The increase in average net loans was offset by
a decrease in average Federal funds sold of $53.2 million or 60.2%.
The yield on average interest-earning assets decreased by 14 basis
points to 4.93% in the first quarter of 2004 from 5.07% in the
corresponding quarter of 2003. The primary reason for the decrease
is due to a 25 basis points decrease in targeted Federal funds rate
in the second quarter of 2003. Total interest expense for the first
quarter of 2004 increased by $327,000 or 9.9% to $3.6 million,
compared to $3.3 million in the same period of 2003. The increase
in interest expense resulted from the volume increase in
interest-bearing liabilities which was partially offset by rate
decreases in interest-bearing liabilities. In the first quarter of
2004, average interest- bearing liabilities increased by $144.9
million or 22.6% to $787.2 million from $642.3 million in the same
quarter of 2003. The Bank's cost of average interest-bearing
liabilities decreased by 24 basis points to 1.85% in the first
quarter of 2004 compared to 2.09% in the same quarter of 2003. The
decrease of 24 basis points in average rate paid on interest
bearing liabilities during the first quarter of 2004 was primarily
the result of the lower interest rate environment. The cost of
funds decreased by 13 basis points to 1.41% in the first quarter of
2004 compared to 1.54% in the same quarter of 2003. The decrease in
the cost of funds was partially attributable to a $29.1 million
increase in average money market accounts and a $24.3 million
increase in average demand deposits in the first quarter of 2004
compared with the corresponding quarter of 2003. The net interest
margin increased by 2 basis points to 3.67% in the first quarter of
2004 compared to 3.65% of the corresponding quarter of 2003.
Non-interest Income Non-interest income increased by $392,000 or
13.3% to $3.3 million in the first quarter of 2004 compared to $2.9
million in the same quarter of 2003. The increase is mainly
attributable to a $649,000 gain on sale of investment securities,
which was partially offset by a $177,000 decrease in service charge
on deposits and a $61,000 decrease in fees generated from servicing
mortgage loans during the first quarter of 2004. Non-interest
Expense Non-interest expense increased by $1.1 million or 18.1% to
$7.4 million in the first quarter of 2004, compared to $6.3 million
in the corresponding quarter of 2003. The increase was mainly
attributable to increases of $565,000 in salaries and employee
benefits and $325,000 in legal and professional expenses. The
increase in salaries and employee benefits in the first quarter of
2004 was primarily due to additional staffing required to support
growth of the Bank. The increase in legal and professional expense
in the first quarter of 2004 was primarily attributable to expenses
in relation to the merger and acquisition of the Bank. Provision
for Loan Losses The provision for loan losses for the first quarter
of 2004 was $400,000 compared to $600,000 for the corresponding
period in 2003. The decrease was mainly attributable to strong
credit quality and slower loan growth in the first quarter of 2004
compared with the same quarter of 2003. Total NPA decreased by
$165,000 or 7.6% to $2.0 million at March 31, 2004 from $2.2
million at March 31, 2003. Management performs an analysis of the
adequacy of the allowance for loan losses on a quarterly basis. The
results of this analysis for the quarter ended March 31, 2004
determined that the allowance was adequate to cover the inherent
risk of losses associated with its loan portfolio under prevailing
and anticipated economic conditions. BALANCE SHEET REVIEW Total
assets as of March 31, 2004 were $1.2 billion, an increase of
$112.3 million or 9.9% from $1.1 billion as of December 31, 2003.
The increase is primarily attributable to an increase of $111.5
million in Federal funds sold. Total gross loans including loans
held for sale increased $7.2 million or 0.8% to $880.4 million as
of March 31, 2004 from $873.2 million at December 31, 2003. Total
deposits as of March 31, 2004 increased by $160.4 million or 18.6%
to $1.0 billion from $863.0 million as of December 31, 2003. The
increase was primarily attributable to a $123.2 million or 95.8%
increase in money market accounts and a $46.6 million or 14.1% in
time certificates of deposit of $100,000 or more which was mainly
contributed by a $50.0 million brokered deposits obtained during
the first quarter of 2004. Federal Home Loan Bank advances
decreased by $52.0 million or 33.1% to $105.0 million at March 31,
2004 from $157.0 million at December 31, 2003. Stockholders' equity
increased by $2.9 million or 2.6% to $113.5 million as of March 31,
2004 from $110.7 million as of December 31, 2003. ASSET QUALITY
REVIEW The credit quality remained strong in the first quarter of
2004. Total NPA were $2.0 million as of March 31, 2004 compared to
$1.1 million as of December 31, 2003. NPA include loans 90 days or
more past due and still accruing interest, non-accrual loans, and
restructured loans. NPA to total loans was 0.23% at March 31, 2004
compared with 0.13% at December 31, 2003. The allowance for loan
losses as of March 31, 2004 was $10.8 million or 1.23% of gross
loans compared with $10.3 million or 1.18% of gross loans at
December 31, 2003. The ratio of allowance for loan losses to
non-performing loans as of March 31, 2004 was 543.4%, compared with
904.5% as of December 31, 2003. During the first quarter of 2004,
net recoveries of $145,000 were recorded compared to net
charge-offs of $169,000 that were recorded in the same quarter of
2003. Pacific Union Bank is a California state-chartered commercial
bank headquartered in Los Angeles, California, which commenced
operations in September 1974. The Bank's primary market includes
the greater Los Angeles metropolitan area, Orange County, Santa
Clara County and the San Francisco metropolitan area. Through its
network of 12 full-service branch offices, and a loan production
office in Seattle, Washington, the Bank provides a wide range of
commercial and consumer banking services to the Korean-American
communities. The Bank's primary focus is on its core customer base
of small and medium-sized Korean-American businesses, professionals
and other individuals. The Bank places a particular emphasis on the
growth of its low cost core-deposit base and the origination of
commercial and residential real estate loans. For additional
information, visit the web site for Pacific Union Bank located at
http://www.pacificunionbank.com/. This release contains statements
that constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. The words
"believe," "estimate," "expect", "intend," anticipate" and similar
expressions and variations thereof identify certain of such
forward- looking statements, which speak only as of the dates which
they were made. The Bank undertakes no obligation to publicly
update or revise any forward- looking statements, whether as a
result of new information, future events, or otherwise. Readers are
cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and
uncertainties, and that actual results may differ materially from
those indicated in the forward- looking statements as a result of
various factors. Readers are cautioned not to place undue reliance
on these forward-looking statements. Pacific Union Bank Condensed
Balance Sheet (Dollars in thousands) March 31, December 31, % 2004
2003 Change Assets: Cash & due from banks-demand $23,104
$24,296 -4.9% Due from banks-interest-bearing 40,228 220 NMV
Federal funds sold 120,000 8,500 NMV Federal Home Loan Bank stock
9,307 7,851 18.5 Securities held-to-maturity 53,432 58,864 (9.2)
Securities available-for-sale 112,687 151,815 (25.8) Loans 879,915
872,300 0.9 Less: Allowance for loan losses (10,846) (10,302) 5.3
Net loans 869,069 861,998 0.8 Loans held for sale 473 906 (47.8)
Bank premises and equipment, net 6,347 6,684 (5.0) Other assets
14,104 15,269 (7.6) Total assets 1,248,751 1,136,403 9.9
Liabilities and stockholders' equity: Deposits: Noninterest-bearing
demand 250,397 254,623 (1.7) Interest-bearing demand and savings
304,886 182,866 66.7 Time deposits 468,081 425,492 10.0 Total
deposits 1,023,364 862,981 18.6 Federal Home Loan Bank advances
105,000 157,017 (33.1) Other liabilities 6,846 5,722 19.6 Total
liabilities 1,135,210 1,025,720 10.7 Total stockholders' equity
113,541 110,683 2.6 Total liabilities and stockholders' equity
1,248,751 1,136,403 9.9 Pacific Union Bank Condensed Income
Statement and Comprehensive Income (Dollars in thousands except per
share data) For the Three Months Ended March 31, % 2004 2003 Change
Interest income: Interest and fees on loans $11,797 $9,938 18.7%
Interest on securities 1,855 1,566 18.5 Interest on federal funds
sold 84 272 (69.1) Other interest income 88 52 69.2 Total interest
income 13,824 11,828 16.9 Interest expense: Deposit 2,821 2,714 3.9
Other 818 598 36.8 Total interest expenses 3,639 3,312 9.9 Net
interest income before provision for loan losses 10,185 8,516 19.6
Provision for loan losses 400 600 (33.3) Net interest income after
provision for loan losses 9,785 7,916 23.6 Non-interest income:
Service charges on deposit accounts 1,463 1,640 (10.8) Remittance
fees 200 216 (7.4) Letter of credit related fees 203 192 5.7 Gain
on sale of investment securities 649 -- 100.0 Gain on sale of loans
451 429 5.1 Other Operating Income 364 461 (21.0) Total
non-interest income 3,330 2,938 13.3 Non-interest expense: Salaries
and employee benefits 3,797 3,232 17.5 Security guards 210 218
(3.7) Net occupancy and equipment expense 1,149 1,037 10.8 Data
processing expense 502 471 6.6 Office supplies 106 76 39.5 Legal
& professional expense 503 178 182.6 Advertising & public
relations 188 153 22.9 Communication related expenses 262 263 (0.4)
Other operating expenses 705 656 7.5 Total non-interest expenses
7,422 6,284 18.1 Income before income taxes 5,693 4,570 24.6 Income
taxes 2,397 1,849 29.6 Net income 3,296 2,721 21.1 Comprehensive
income 3,881 2,556 51.8 Net income per share - basic $0.31 $0.26
19.2 Net income per share - diluted $0.30 $0.25 20.0 Book value per
share $10.62 $9.74 9.0 Basic average common shares outstanding
10,687,668 10,621,554 0.6 Diluted average common shares outstanding
10,809,733 10,683,470 1.2 Period end shares outstanding 10,692,821
10,621,554 0.7 At or For the Three Months Ended March 31, 2004 2003
Key Operating Ratios: Return on average assets 1.14% 1.11% Return
on average equity 11.71 10.71 Earning assets yield 4.93 5.07
Interest rate on interest-bearing liabilities 1.85 2.09 Net
interest margin 3.67 3.65 Cost of funds 1.41 1.54 Efficiency ratio
54.92 54.86 Average stockholders' equity to average total assets
9.73 10.40 Average Balances: Average interest earning assets
$1,110,729 $933,334 Average net loans 864,682 690,989 Federal funds
sold 35,182 88,359 Average investment securities 201,242 146,350
Total average assets 1,157,371 977,568 Average interest-bearing
liabilities 787,182 642,258 Average non-interest bearing deposits
251,474 227,204 Average low-cost deposits 238,723 209,857 Average
certificate of deposits 422,931 362,370 Average equity 112,586
101,641 Allowance for loan losses: Balance at beginning of period
$10,301 $8,873 Provision for loan losses 400 600 Net charge-offs
(recoveries) (145) 169 Balance at end of period 10,846 9,304
Allowance for loan losses to total loans at period end 1.23% 1.27%
Net (recoveries) charge-offs to average total loans -0.07 0.10
Non-performing assets: Non-accrual loans $1,996 $2,136 Loans past
due 90 days or more and accruing -- 25 Total non-performing loans
1,996 2,161 Total non-performing assets 1,996 2,161 Nonperforming
loans to total loans 0.23% 0.30 Nonperforming assets to total loans
and other real estate owned 0.23 0.30 Nonperforming assets to total
assets 0.16 0.23 DATASOURCE: Pacific Union Bank CONTACT: Dianne
Kim, Chief Financial Officer of Pacific Union Bank, +1-213-351-9260
Web site: http://www.pacificunionbank.com/
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