Plaza Bancorp, the Holding Company of Plaza Bank, Announces Record Financial Results for September 30, 2017 (unaudited)

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IRVINE, CA--(Marketwired - October 12, 2017) -

Financial highlights for the quarter ended September 30, 2017:

Plaza Bancorp (OTC PINK: PLZZ) (the "Company"), the holding company of Plaza Bank (the "Bank"), reported unaudited net income for the first nine months of 2017 of $11.3 million, or $0.37 per diluted share. This is an increase of $3.2 million, or 40.0%, compared to the first nine months of 2016 which had net income of $8.1 million, or $0.27 per diluted share.

For the nine months ended September 30, 2017, the Company's annualized return on average assets was 1.25% and annualized return on average equity was 12.07%, up from an annualized return on average assets of 1.00% and an annualized return on average equity of 9.64% for the first nine months of 2016.

For the quarter ended September 30, 2017, the Company reported net income of $4.1 million, or $0.13 per share on a diluted basis, compared with $3.5 million, or $0.12 per diluted share, for the second quarter of 2017 and net income of $2.8 million, or $0.09 per diluted share, in the third quarter of 2016. This represents an increase in the per diluted share amount of 8.3% and 44.4% over the prior quarter and the 2016 comparable quarter, respectively.

For the quarter ended September 30, 2017, the Company's annualized return on average assets was 1.31% and annualized return on average equity was 12.72%. An increase of 10.1% and 12.4%, respectively, over the quarter ended June 30, 2017 where the Company's return on average assets was 1.19% and the return on average common equity was 11.32%. The improvement over the prior year's quarter ended September 30, 2016 was 31.0% and 29.9%, respectively, as the Company's return on average assets was 1.00% and the return on average common equity was 9.79% for this period.

Gene Galloway, Chief Executive Officer of the Company and the Bank, commenting on the quarterly results, stated "Even with the August announcement that Plaza had agreed to be acquired by Pacific Premier Bancorp, Inc., the Company's third quarter results were the strongest that we have ever reported. This is a testament to the excellence and dedication of the employees of Plaza. Over the last eight years, these employees took a $140 million bank, losing $500,000, per month and transformed it into a nationally ranked top community bank with $1.3 billion in assets and making $1.5 million per month (excludes Plaza Bancorp's results). The Plaza story is a great example of what can be accomplished when you have a talented and committed team."

Rick Sowers, President of the Company and the Bank, further commenting on the results, added, "I could not be more proud of the performance of our Company and our people. We set our intention to achieve industry leading results, and we continue to achieve new highs. As we finalize our merger with Pacific Premier Bank, the Bank is positioned to continue to provide outstanding service and solutions for our clients and the communities we serve."

Net interest income for the quarter ended September 30, 2017 totaled $15.3 million, an increase of $1.5 million, or 11.2%, from the second quarter of 2017. The quarterly change in net interest income reflects higher average loan outstandings of $18.1 million and growth in the average loan yield of 28 basis points, partially offset by an increase in the cost of funding of 3 basis points. For the third quarter, loan interest income totaled $16.9 million, the average of total outstanding loans was $1.1 billion and the annualized yield was 6.38%. Interest expense for the third quarter related to the $1.1 billion in average deposits was $1.7 million, or 62 basis points annualized. The interest expense related to the subordinated debentures for the third quarter was $453,000, or 7.25% annualized.

Net interest margin for the third quarter of 2017 was 5.01% compared with 4.83% for the second quarter of 2017. The net interest margin for the third quarter of 2017 and for the second quarter of 2017 include the benefit of loan prepayments, which added 19 and 9 basis points to each quarter, respectively. The 18 basis point margin increase was driven by the aforementioned increases in average loans outstanding and prepayments, partially offset by an increase in funding cost.

The Company recorded a provision for loan losses in the amount of $270,000 during the third quarter of 2017 compared to a provision of $383,000 for the second quarter of 2017. The $113,000 decrease in the provision is primarily due to lower loan growth in the third quarter.

Noninterest income increased $259,000, or 15.9%, for the quarter ended September 30, 2017 as compared to the quarter ended June 30, 2017. The increase in noninterest income quarter-over-quarter is primarily related to a $214,000 increase in net gain from loan sales and $90,000 reversal of an OREO loss accrual that was set-up in the second quarter of 2017.

Non-interest expense totaled $9.7 million for the third quarter of 2017, an increase of $739,000, or 8.3%, compared with the second quarter of 2017. The increase was primarily driven by an increase in incentive compensation of $377,000, merger expense of $320,000 and a write-down of $100,000 on abandoned office space in the third quarter compared to the prior quarter. The Company had 164 full-time equivalent employees as of September 30, 2017, down 11 employees from the prior quarter.

For the third quarter of 2017, the Company's effective tax rate was 43.4%, compared to 41.8% for the second quarter of 2017. The increase in the effective tax rate is primary due to non-deductible expenses related to the aforementioned merger.

Loans held for investment totaled $1.1 billion at September 30, 2017, an increase of $2.0 million, or 0.2%, from June 30, 2017, and an increase of $59.3 million, or 5.9%, from September 30, 2016.

Loan activity during the third quarter of 2017 included loan originations of $87.4 million, a decrease of $20.7 million or 19.2% compared to the prior quarter. Originations of loan commitments included commercial real estate loan originations of $63.7 million, commercial and industrial loan originations of $17.0 million and indirect auto originations of $6.6 million. At September 30, 2017 the Company's loans held for investment to deposit ratio was 98.1%, compared with 98.2% and 98.0% at June 30, 2017 and September 30, 2016, respectively.

At September 30, 2017, the allowance for loan losses was $13.2 million, an increase of $256,000, or 2.0%, from June 30, 2017. The provision for loan loss for the quarter was $270,000 while net charge-offs were $15,000. Net charge-offs for the first nine months of 2017 were $125,000, or 0.01% of the loans held for investment balance as of December 31, 2016.

At September 30, 2017, the Bank's allowance for loan losses as a percentage of nonaccrual loans was 309%, an increase from 274% at June 30, 2017 and a decrease from 727% at September 30, 2016. The ratio of allowance for loan losses to loans held for investment was 1.25%, slightly higher then June 30, 2017 ratio of 1.23% and below the 1.29% at September 30, 2016. Including the loan fair market value discounts recorded in connection with the September 2009 change in control at Plaza Bank and four prior acquisitions, the allowance for loan losses to loans held for investment ratio was 1.38% at September 30, 2017, compared with 1.37% at June 30, 2017 and 1.47% at September 30, 2016.

Nonperforming assets totaled $4.5 million or 0.35% of total assets at September 30, 2017, compared to $4.9 million or 0.39% of total assets at June 30, 2017. During the third quarter of 2017, nonperforming loans decreased $449,000 to $4.3 million, and other real estate owned remained at $206,000. The decrease in non-accrual loans is primarily due to the SBA paying the guaranteed amount on a loan acquired in an acquisition that had a book balance of $403,000. The SBA payment exceeded the book balance and a gain of $84,000 was realized during the quarter on this transaction.

Loan delinquencies, defined as 30 days to and including 89 days past due, as of September 30, 2017, increased to $4.2 million, or 0.40% of loans held for investment compared to $454,000, or 0.04% of loans held for investment at June 30, 2017. Loans that were 90 days or more past due totaled $3.4 million, or 0.33% of loans held for investment as of September 30, 2017, up from a June 30, 2017 total of $645,000, or 0.06% of loans held for investment. These loans were all classified as nonperforming assets. The increase in loans delinquent 90 days or greater past due is attributable to one SBA guaranteed commercial real estate loan for $3.1 million with a recent appraised value of $5.2 million that is in foreclosure.

At September 30, 2017, deposits totaled $1.1 billion, an increase of $2.6 million, or 0.2%, from June 30, 2017 and an increase of $59.6 million, or 5.9%, from September 30, 2016. At September 30, 2017, non-maturity deposits totaled $837.9 million, an increase of $11.7 million, or 1.4%, from June 30, 2017 and an increase of $65.3 million, or 8.4%, from September 30, 2016.

Total borrowings at September 30, 2017 amounted to $70.8 million, an increase of $15.0 million, or 26.9%, from June 30, 2017 and $16.0 million, or 29.3%, from September 30, 2016. At September 30, 2017, total borrowings represented 5.5% of total assets, compared to 4.4% and 4.6%, as of June 30, 2017 and September 30, 2016, respectively.

At September 30, 2017, the Company's ratio of tangible common equity to total assets was 10.55%, with a tangible book value of $4.05 per share and $3.99 per diluted share.

At September 30, 2017, the Company had total risk based capital on a consolidated basis of approximately $156.6 million, and the Bank had total risk based capital of approximately $147.2 million. The federal banking regulators' capital ratios requirements for "well capitalized" banks are 5.00% for tier 1 leverage capital, 6.5% for common equity tier 1 capital, 8.00% for tier 1 capital and 10.00% for total capital. At September 30, 2017, the Bank exceeded all regulatory capital ratio requirements for well capitalized banks.

The following table sets forth the capital ratios of the Company and the Bank at September 30, 2017:

About Plaza Bancorp

Plaza Bancorp is the holding company of Plaza Bank. Plaza Bank is a nationally rated top community bank committed to serving and supporting the business communities of Southern California and Southern Nevada. We are committed to meeting the unique financial needs of businesses and professionals with superb options for small business lending, commercial and industrial lending, and asset based lending. You can expect a full service bank offering deposit accounts, online banking, and treasury management solutions. Our expert bankers tailor creative solutions to provide your business with a truly personal banking experience. With seven regional offices located in El Segundo, Irvine, Las Vegas, Manhattan Beach, Montebello, Pasadena and San Diego, Plaza Bank makes a positive impact in the communities we serve. Plaza Bank rose to the top 5.3% of community banks and ranked #29 of the "100 Top-Performing Community Banks" in 2016 by S&P Global Market Intelligence, out of 546 banks with assets between $1 billion to $10 billion. Other Plaza Bank top performance rankings include a Bauer Financial award of "5 Stars" and a Findley Report "Super Premium" ranking. Our Mission: Plaza Bank is dedicated to creating an exceptional and personal experience, one relationship at a time. For more information, visit plazabank.com.

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 Company's ability to consummate the proposed merger with Pacific Premier Bancorp, Inc. on acceptable terms or at all; 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.

Attachment Available: http://www.marketwire.com/library/MwGo/2017/10/12/11G146505/Plaza_PDF_10-12-17-109a2611d794aec6a8b57efb322ec25b.pdf

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Marketwire: 01:30 GMT Friday 13th October 2017

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