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Security California Bancorp Reports 31% Increase in Net Income for Third Quarter of 2015

RIVERSIDE, Calif., Oct. 22, 2015 (GLOBE NEWSWIRE) -- Security California Bancorp (OTCBB:SCAF), the parent company of Security Bank of California, reported net income of $1.369 million, or 23 cents per share, for the third quarter of 2015, an increase of 31% from net income of $1.049 million, or 18 cents per share, for the third quarter of 2014.

For the nine months ended September 30, 2015, the Company reported net income of $3.879 million, or 66 cents per share, an increase of 34% from net income of $2.906 million, or 50 cents per share, for the same period in 2014.

Third Quarter 2015 Year-Over-Year Highlights

  • Total loans were $477 million, an increase of 16%
  • Total deposits were $648 million, an increase of 26%
  • Total assets were $733 million, an increase of 21%

"We are pleased to deliver one of the most profitable quarters in our history, with our net income increasing by 31% over the same period last year," said James A. Robinson, Chairman and CEO of Security California Bancorp. "We are very excited about our pending merger with Pacific Premier Bancorp. We believe the combination of our two banks will result in a powerful commercial banking force in Southern California with a strong presence in the Inland Empire. We look forward to continuing to provide our customers with the same level of exceptional service they have come to expect from Security Bank, while giving them the greater borrowing capacity and broader suite of products and services that Pacific Premier can offer."

Third Quarter 2015 Summary Results

Net Interest Income and Net Interest Margin

Net interest income for the third quarter of 2015 was $6.2 million, an increase of 17% from $5.3 million in the third quarter of 2014. The increase in net interest income was primarily driven by growth in total loans outstanding.

Net interest margin was 3.54% in the third quarter of 2015, a decrease of 12 basis points from the prior quarter. The decrease in net interest margin was primarily attributable to a larger percentage of earning assets being invested in the securities portfolio.

Non-interest Income

Non-interest income for the third quarter of 2015 was $953,000, an increase of 28% from $745,000 in the same quarter of the prior year. The increase in non-interest income was primarily attributable to higher gains on sales of SBA loans.

Non-interest Expense

Non-interest expense was $4.7 million for the third quarter of 2015, an increase of 16% from $4.0 million in the year-ago period. The increase in non-interest expense was primarily due to premises and personnel expense added through the acquisition of the new Temecula/Murrieta branch, as well as $319,000 in merger-related expense.

Balance Sheet

Total Assets

Total assets were $733 million at September 30, 2015, an increase of 21% from $607 million at September 30, 2014, driven by strong growth in both loans and deposits.

Total Loans

Total loans were $477 million at September 30, 2015, an increase of 16% from $411 million at September 30, 2014. The increase in total loans was primarily driven by growth in the commercial and industrial, commercial real estate, and construction portfolios.

Total Deposits

Total deposits were $648 million at September 30, 2015, an increase of 26% from $514 million at September 30, 2014. The increase in total deposits was driven by the addition of new client relationships, as well as approximately $40 million in deposits added through the acquisition of the new Temecula/Murrieta branch.

Asset Quality

Total non-performing assets were $4.7 million, or 0.64% of total assets, at September 30, 2015, compared with $5.1 million, or 0.76% of total assets, at June 30, 2015.

At September 30, 2015, total non-accrual loans were $4.7 million, or 0.99% of total loans, compared with $5.1 million, or 1.08% of total loans, at June 30, 2015.

During the third quarter of 2015, the Company had $62,000 in net recoveries, compared with net recoveries of $33,000 in the second quarter of 2015.

The Company recorded a provision for loan losses of $76,000 in the third quarter of 2015 to reflect the growth in the loan portfolio. The allowance for loan losses as a percentage of gross loans was 1.54% at September 30, 2015, unchanged from 1.54% at June 30, 2015.

Capital

Security California Bancorp remained well capitalized as of September 30, 2015. All of the Company's capital ratios exceeded minimum regulatory standards for "well capitalized" institutions. As of September 30, 2015, the Company's Tier 1 leverage ratio was 11.00%, the Tier 1 risk-based capital ratio was 14.10%, and the Total risk-based ratio was 15.35%, compared with the regulatory minimum standards of 4%, 6% and 8%, respectively.

About Security California Bancorp and Security Bank of California

Security California Bancorp is the parent of Security Bank of California and is traded on the Over the Counter Bulletin Board ("OTCBB") under the symbol SCAF.OB. Through its full service offices in Riverside, San Bernardino, Redlands, Orange, Palm Desert, and Murrieta/Temecula, Security Bank of California is a full service community bank, focusing on providing banking services for businesses, their owners and families, and successful individuals. The bank also has a Loan Production Office ("LPO") in Irwindale. To learn more about the bank's products and services, call 951-368-2265 or visit the company's Web site at www.securitybankca.com.

Pacific Premier Bancorp, Inc. Merger Announcement

On September 30, 2015, Pacific Premier Bancorp, Inc., a Delaware corporation ("PPBI"), and Security California Bancorp entered into an Agreement and Plan of Reorganization (the "Merger Agreement") pursuant to which the Company will be merged with and into PPBI, immediately followed by the merger of the Company's wholly-owned bank subsidiary, Security Bank of California, with and into Pacific Premier Bank, the wholly-owned bank subsidiary of PPBI. Pacific Premier Bank is a business bank primarily focused on serving small and middle market business in the counties of Los Angeles, Orange, Riverside, San Bernardino and San Diego, California. Pacific Premier Bank offers a diverse range of lending products including commercial, commercial real estate, construction, residential warehouse and SBA loans, as well as specialty banking products for homeowners associations and franchise lending nationwide. Pacific Premier Bank serves its customers through its 16 full-service depository branches in Southern California located in the cities of Corona, Encinitas, Huntington Beach, Irvine, Los Alamitos, Newport Beach, Palm Desert, Palm Springs, Riverside, San Bernardino, San Diego, Seal Beach and Tustin.

Forward Looking Statements

This release may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties may include but are not necessarily limited to fluctuations in interest rates, inflation, government regulations and general economic conditions, and competition within the business areas in which the Bank is conducting its operations, including the real estate market in California and other factors beyond the Bank's control. Such risks and uncertainties could cause results for subsequent interim periods or for the entire year to differ materially from those indicated. Readers should not place undue reliance on the forward-looking statements, which reflect management's view only as of the date hereof. The Bank undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.

Notice to Security California Bancorp and Pacific Premier Bancorp, Inc. Shareholders

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed acquisition of Security California Bancorp by PPBI, a registration statement on Form S-4 will be filed with the Securities and Exchange Commission ("SEC") by PPBI. The registration statement will contain a joint proxy statement/prospectus to be distributed to the shareholders of Security California Bancorp and PPBI in connection with their vote on the acquisition. SHAREHOLDERS OF SECURITY CALIFORNIA BANCORP AND PPBI ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED ACQUISITION. The final joint proxy statement/prospectus will be mailed to shareholders of Security California Bancorp and PPBI. Investors and security holders will be able to obtain the documents free of charge at the SEC's website, www.sec.gov. In addition, documents filed with the SEC by PPBI will be available free of charge by (1) accessing the PPBI's website at www.ppbi.com under the "Investor Relations" link and then under the heading "SEC Filings," (2) writing PPBI at 17901 Von Karman Avenue, Suite 1200, Irvine, CA 92614, Attention: Investor Relations or (3) writing Security California Bancorp at 3403 Tenth Street, Suite 830, Riverside, CA 92501, Attention: Corporate Secretary.

The directors, executive officers and certain other members of management and employees of PPBI may be deemed to be participants in the solicitation of proxies in respect of the proposed acquisition. Information about the directors and executive officers of PPBI is included in the proxy statement for its 2015 annual meeting of shareholders, which was filed with the SEC on April 27, 2015. The directors, executive officers and certain other members of management and employees of Security California Bancorp may also be deemed to be participants in the solicitation of proxies in favor of the acquisition from the shareholders of Security California Bancorp. Information about the directors and executive officers of Security California Bancorp will be included in the joint proxy statement/prospectus for the acquisition. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the joint proxy statement/prospectus regarding the proposed acquisition when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph.

Security California Bancorp and Subsidiaries
Consolidated Income Statements (Unaudited)
(Dollars in Thousands)
Three months ended Nine months ended
9/30/2015 6/30/2015 9/30/2014 9/30/2015 9/30/2014
INTEREST INCOME
Loans, with fees $ 5,805 $ 5,525 $ 4,900 $ 16,368 $ 14,041
Deposit with banks 30 30 23 86 67
Investment securities 830 683 766 2,213 2,474
Total interest income 6,664 6,238 5,688 18,667 16,583
INTEREST EXPENSE
Deposits 495 420 392 1,307 1,084
Other 4 8 9 18 38
Total interest expense 499 428 401 1,325 1,122
Net interest income 6,165 5,810 5,287 17,343 15,461
Provision for loan losses 76 234 164 129 841
Net income after provision for loan losses 6,089 5,575 5,123 17,213 14,620
NON INTEREST INCOME
Service charges on deposits 275 251 228 780 715
Gain on sale of securities 10 69 3 103 54
SBA gains on sales and fees 538 548 331 1,378 1,162
Other 130 245 182 501 536
Total non interest income 953 1,113 745 2,762 2,467
NON INTEREST EXPENSE
Salaries & benefits 2,785 2,728 2,541 8,194 7,686
Premises & equipment 525 469 427 1,445 1,356
Other 1,390 1,240 1,068 3,701 3,032
Total non interest expense 4,701 4,436 4,036 13,341 12,073
Net income before taxes 2,341 2,252 1,832 6,635 5,013
Provision for income tax 972 934 782 2,756 2,107
NET INCOME $ 1,369 $ 1,319 $ 1,049 $ 3,879 $ 2,906
EARNINGS PER SHARE
Diluted earning per share $ 0.23 $ 0.23 $ 0.18 $ 0.66 $ 0.50
Average outstanding common shares 5,768,061 5,670,916 5,670,174 6,039,257 5,670,174
PERFORMANCE INDICATORS
Return on average assets 0.76% 0.81% 0.71% 0.78% 0.68%
Return on average equity 7.08% 7.20% 6.12% 7.00% 5.88%
Efficiency ratio 66.13% 64.73% 66.94% 66.70% 67.55%
Security California Bancorp & Subsidiaries
Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
As of
9/30/2015 06/30/15 03/31/15 12/31/14 09/30/14
ASSETS
Cash & due from banks $ 13,448 $ 10,227 $ 12,554 $ 13,730 $ 12,097
Interest bearing deposits with banks 26,482 35,628 30,285 37,012 35,523
Investment Securities 204,766 142,367 136,486 137,323 138,272
Loans:
Commercial & Industrial 174,634 177,425 168,128 157,447 157,448
Real Estate - Commercial 248,940 239,830 240,923 220,757 213,281
Real Estate - Construction 23,321 23,662 18,439 14,509 12,350
Real Estate - Consumer 25,203 21,809 22,382 23,747 22,579
Other 4,606 4,964 4,578 5,051 5,087
Total 476,704 467,690 454,450 421,512 410,745
Allowance for loan losses (7,344) (7,206) (6,939) (6,680) (6,454)
Loans, net 469,360 460,484 447,511 414,832 404,291
Premises & equipment 5,343 4,002 4,003 4,075 3,821
Accrued interest 2,030 1,861 1,784 1,716 1,721
Other assets 11,716 10,414 9,208 9,554 11,175
TOTAL ASSETS $ 733,145 $ 664,982 $ 641,831 $ 618,242 $ 606,900
LIABILITIES
Deposits:
Demand non interest bearing $ 276,931 $ 247,984 $ 239,620 $ 232,187 $ 217,237
Demand interest bearing 24,035 25,659 42,519 29,737 21,427
Money market & savings 228,015 198,472 172,673 171,322 180,813
Time certificate 118,714 101,018 101,852 92,534 94,925
Total deposits 647,695 573,133 556,665 525,780 514,402
Other borrowings 4,500 18,300 11,000 19,000 22,000
Accrued interest & other liabilities 1,910 634 1,312 2,495 2,199
Total Liabilities 654,106 592,068 568,976 547,275 538,601
SHAREHOLDERS' EQUITY
Preferred stock 7,133 7,133 7,133 7,133 7,133
Common stock 60,189 56,626 56,616 56,607 56,596
Retained earnings 12,204 10,835 9,516 8,326 7,082
Accumulated other comprehensive income (487) (1,680) (411) (1,098) (2,513)
Total Shareholders' Equity 79,039 72,915 72,855 70,967 68,299
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 733,145 $ 664,982 $ 641,831 $ 618,242 $ 606,900
CAPITAL ADEQUACY
Tier 1 leverage ratio 11.00% 11.31% 11.69% 11.84% 11.95%
Tier 1 risk-based capital ratio 14.10% 13.93% 13.93% 14.77% 14.89%
Total risk-based capital ratio 15.35% 15.18% 15.18% 16.02% 16.15%
Tangible Equity / Tangible Total Assets 10.68% 10.93% 11.31% 11.44% 11.21%
Outstanding common shares 6,039,257 5,670,916 5,670,916 5,670,916 5,670,916
Book value (total equity) per common share $ 13.09 $ 12.86 $ 12.85 $ 12.51 $ 12.04
Security California Bancorp & Subsidiaries
Consolidated Average Balance Sheets and Yield Data (Unaudited)
(Dollars in thousands)
Three months ended - 2015
September 30 June 30
Yields Interest Yields Interest
Average or Income/ Average or Income/
Balance Rates Expense Balance Rates Expense
ASSETS
Interest earning assets
Loans, with fees $ 470,987 4.89% $ 5,805 $ 461,734 4.80% $ 5,525
Interest bearing with banks 38,184 0.31% 30 35,193 0.34% 30
Investment securities 183,457 1.81% 830 139,150 1.96% 683
Total interest earning assets 692,628 3.82% $ 6,664 636,076 3.93% $ 6,238
Non interest earning assets
Cash & due from banks 12,317 11,887
All other assets 8,369 6,710
Total non interest earning assets 20,686 18,597
TOTAL ASSETS $ 713,314 $ 654,674
LIABILITIES & SHAREHOLDERS' EQUITY
Interest bearing liabilities
Deposits
Demand interest bearing $ 25,598 0.14% $ 9 $ 29,765 0.14% $ 10
Money market & savings 216,628 0.51% 276 186,753 0.52% 242
Time certificate 112,969 0.74% 211 101,087 0.67% 168
Other borrowings 7,524 0.20% 4 15,766 0.19% 8
Total interest bearing liabilities 362,719 0.55% $ 499 333,371 0.51% $ 428
Non interest bearing liabilities
Demand deposits 272,149 247,360
Accrued interest & other liabilities 1,736 514
Total non interest bearing liabilities 273,884 247,873
Shareholders' equity 76,711 73,429
TOTAL LIABILITIES & SHAREHOLDERS'S EQUITY $ 713,314 $ 654,674
NIM and NET INTEREST INCOME 3.54% $ 6,165 3.66% $ 5,810
Security California Bancorp & Subsidiaries
Consolidated Average Balance Sheets and Yield Data (Unaudited)
(Dollars in thousands)
Three months ended September 30,
2015 2014
Yields Interest Yields Interest
Average or Income/ Average or Income/
Balance Rates Expense Balance Rates Expense
ASSETS
Interest earning assets
Loans, with fees $ 470,987 4.89% $ 5,805 $ 402,385 4.83% $ 4,900
Interest bearing with banks 38,184 0.31% 30 25,227 0.36% 23
Investment securities 183,457 1.81% 830 144,694 2.12% 766
Total interest earning assets 692,628 3.82% $ 6,664 572,307 3.95% $ 5,688
Non interest earning assets
Cash & due from banks 12,317 10,783
All other assets 8,369 6,824
Total non interest earning assets 20,686 17,607
TOTAL ASSETS $ 713,314 $ 589,914
LIABILITIES & SHAREHOLDERS' EQUITY
Interest bearing liabilities
Deposits
Demand interest bearing $ 25,598 0.14% $ 9 $ 21,835 0.14% $ 8
Money market & savings 216,628 0.51% $ 276 166,958 0.54% 228
Time certificate 112,969 0.74% $ 211 93,727 0.66% 156
Other borrowings 7,524 0.20% $ 4 27,180 0.13% 9
Total interest bearing liabilities 362,719 0.55% $ 499 309,699 0.51% $ 401
Non interest bearing liabilities
Demand deposits 272,149 210,248
Accrued interest & other liabilities 1,736 1,985
Total non interest bearing liabilities 273,884 212,233
Shareholders' equity 76,711 67,982
TOTAL LIABILITIES & SHAREHOLDERS'S EQUITY $ 713,314 $ 589,914
NIM and NET INTEREST INCOME 3.54% $ 6,165 3.67% $ 5,287
Security California Bancorp & Subsidiaries
Consolidated Average Balance Sheets and Yield Data (Unaudited)
(Dollars in thousands)
Nine months ended September 30,
2015 2014
Yields Interest Yields Interest
Average or Income/ Average or Income/
Balance Rates Expense Balance Rates Expense
ASSETS
Interest earning assets
Loans, with fees $ 455,855 4.80% $ 16,368 $ 387,641 4.84% $ 14,041
Interest bearing with banks 35,632 0.32% 86 22,323 0.41% 67
Investment securities 152,845 1.93% 2,213 146,085 2.26% 2,474
Total interest earning assets 644,333 3.87% $ 18,667 556,050 3.99% $ 16,583
Non interest earning assets
Cash & due from banks 11,857 10,519
All other assets 7,247 7,794
Total non interest earning assets 19,104 18,313
TOTAL ASSETS $ 663,437 $ 574,363
LIABILITIES & SHAREHOLDERS' EQUITY
Interest bearing liabilities
Deposits
Demand interest bearing $ 30,389 0.14% $ 33 $ 19,279 0.14% $ 20
Money market & savings 191,801 0.51% 735 158,448 0.52% 619
Time certificate 104,447 0.69% 539 91,386 0.65% 445
Other borrowings 13,065 0.18% 18 38,644 0.13% 38
Total interest bearing liabilities 339,703 0.52% $ 1,325 307,757 0.49% $ 1,122
Non interest bearing liabilities
Demand deposits 248,249 199,010
Accrued interest & other liabilities 1,421 1,557.83
Total non interest bearing liabilities 249,670 200,567
Shareholders' equity 74,065 66,039
TOTAL LIABILITIES & SHAREHOLDERS'S EQUITY $ 663,437 $ 574,363
NIM and NET INTEREST INCOME 3.60% $ 17,343 3.72% $ 15,461
Security California Bancorp & Subsidiaries
Consolidated Asset Quality and Credit Data (Unaudited)
(Dollars in thousands)
As of
09/30/15 06/30/15 03/31/15 12/31/14 09/30/14
TOTAL ASSETS 733,145 664,982 641,831 618,242 606,900
GROSS LOANS 476,704 467,690 454,450 421,512 410,745
ALLOWANCE FOR LOAN LOSSES
Beginning of period $ 7,207 $ 6,939 $ 6,680 $ 6,454 $ 6,160
Quarterly movement:
Provision for loan losses 76 234 (181) 99 164
Charge-offs (35) (20) (176) -- --
Recoveries 97 53 616 127 130
End of period $ 7,344 $ 7,207 $ 6,939 $ 6,680 $ 6,454
NON PERFORMING ASSETS
Loans accounted for on a non-accrual basis $ 4,698 $ 5,050 $ 4,994 $ 5,169 5,261
Loans with principal and/or interest contractually past due 90 days and still accruing interest -- -- -- -- --
Non performing loans 4,698 5,050 4,994 5,169 5,261
Other real estate owned -- -- -- -- --
Non performing assets 4,698 5,050 4,994 5,169 5,261
Loans restructured and in compliance with modified terms 1,206 1,975 1,298 563 659
Non performing assets and restructured loans $ 5,903 $ 7,025 $ 6,292 $ 5,732 $ 5,920
Non Performing Loans by Asset Type
Commercial & Industrial $ 3,751 $ 3,916 $ 3,935 $ 4,093 $ 4,162
SBA 95 272 179 185 193
Consumer 852 862 880 891 906
Other -- -- -- -- --
Total non performing loans by asset type $ 4,698 $ 5,050 $ 4,994 $ 5,169 $ 5,261
ASSET QUALITY
Allowance for loan losses / gross loans 1.54% 1.54% 1.53% 1.58% 1.57%
Allowance for loan losses / non performing loans 156.35% 142.71% 138.95% 129.24% 122.67%
Non performing assets / total assets 0.64% 0.76% 0.78% 0.84% 0.87%
Non performing loans /gross loans 0.99% 1.08% 1.10% 1.23% 1.28%
Net quarterly charge-offs / gross loans -0.01% 0.00% -0.04% 0.00% 0.00%

CONTACT: Tony Rossi Financial Profiles for Security California Bancorp (310) 622-8221 trossi@finprofiles.com Thomas M. Ferrer EVP & Chief Financial Officer (951) 368-2268 tferrer@securitybankca.comSource:Security California Bancorp