PUBB Pacific Union Bank (MM)

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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