Plaza Bancorp, the Holding Company of Plaza Bank, Announces Financial Results for the Third Quarter Ended September 30, 2016 (unaudited)

IRVINE, CA--(Marketwired - Oct 19, 2016) -  Plaza Bancorp (OTCBB: PLZZ)

Third quarter 2016 highlights - compared to prior quarter

• 51% annualized growth in deposits
• Assets up 29% annualized to $1.2 billion
• Loans held for investment increased $41 million
• Net interest margin improved to 4.77%

Plaza Bancorp (OTCBB: PLZZ) (the "Company"), the holding company of Plaza Bank (the "Bank"), reported unaudited net income for the quarter ended September 30, 2016 of $2.8 million, or $0.09 per share on a diluted basis compared with $3.0 million, or $0.10 per diluted share for the second quarter of 2016. For the quarter ended September 30, 2016, the Company's annualized return on average assets was 1.00% and annualized return on average equity was 9.79%, down from an annualized return on average assets of 1.09% and an annualized return on average equity of 10.58% for the second quarter of 2016.

For the first nine months of 2016, the Company recorded net income of $8.1 million, or $0.27 per diluted share. For the same period in 2015, the Company recorded net income of $931,000, or $0.03, per diluted share. For the three quarters ended September 30, 2016, the Company's annualized return on average assets was 1.00% and annualized return on average equity was 9.64%, up from an annualized return on average assets of 0.18% and an annualized return on average equity of 3.19% for the same period in 2015. The Company's results for the first nine months of 2015 included $4.9 million in merger related expenses.

Gene Galloway, President and Chief Executive Officer of the Company and the Bank, commented on the third quarter results, stating "We are very pleased with the strong performance by our Bank's personnel to increase our total assets by $82 million or 7% during the quarter to $1.2 billion. The balance sheet growth was driven by the successful implementation of our plan to grow the three major deposit categories, non-interest checking, money market and certificates of deposit. These categories, during the third quarter, grew by $25 million, $81 million and $8 million, respectively, increasing our total deposits by $114 million or 13% over the second quarter of 2016."

Mr. Galloway concluded with, "Our loan production continued to be robust as our loan originations were $113 million in the third quarter. Additionally, our loan pipeline is strong and we expect to close out the year with another stellar loan production quarter."

Other highlights for quarter ended September 30, 2016 included:

• Loans held for investment grew $40.8 million, or 17.1% annualized, to $997.1 million during the third quarter compared to loan growth of $37.8 million, or 16.5% annualized, for the second quarter of 2016
• Loan originations by the Bank in the third quarter totaled $113.2 million, an increase of $29.3 million compared to the originations for the second quarter of 2016. Loan originations year-to-date total $283.7 million
• Net interest income increased $892,000, or 7.4%, to $13.0 million for the third quarter of 2016 compared to $12.1 million for the second quarter of 2016
• The Company's net interest margin ("NIM") increased in the third quarter to 4.77% compared to the prior linked quarter's NIM of 4.68%. The NIM for the first nine months of 2016 was 4.72%
• The Company's loans held for investment to deposits ratio decreased from 105.9% as of June 30, 2016 to 98.0% as of September 30, 2016
• Total revenues increased $280,000, or 1.7%, to $16.5 million for the third quarter of 2016 compared to $16.2 million for the second quarter of 2016
• During the quarter, the Company realized a gain of $625,000 on the sale of $9.1 million of SBA 7(a) loans compared to a gain $1.2 million on the sale of $17.5 million of SBA 7(a) loans in the second quarter of 2016
• Nonperforming assets totaled $2.0 million, or 0.17% of total assets at September 30, 2016 compared to $1.2 million, or 0.11% at June 30, 2016
• The ratio of allowance for loan losses to total loans held for investment was 1.29% at September 30, 2016. Including the credit discount on acquired loans of $1.8 million in the ratio, the ratio increases to 1.47%
• The Company's efficiency ratio for the quarter was 63% compared to the 62% for the second quarter in 2016
• Tangible book value per diluted share increased $0.10 to $3.52 during the third quarter

Net interest income for the quarter ended September 30, 2016 totaled $13.0 million. Loan interest income totaled $14.5 million, the average total outstanding loans for the quarter were $981.6 million and the annualized yield was 5.86%. Interest expense related to deposits was $1.2 million for the quarter, or 49 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 $494,000 provision for loan losses during the third quarter of 2016 principally as a result of the $40.8 million loan growth. For the third quarter, total charge-offs were $74,000 and recoveries were $25,000. Non-accrual loans net of discounts totaled $1.8 million at September 30, 2016 of which $652,000 is covered under a FDIC share-loss agreement or SBA guaranty. 

Non-interest income for the third quarter of 2016 was $1.8 million. Non-interest income for the third quarter is primarily comprised of a net gain from the sale of loans of $625,000, loan servicing income of $333,000, deposit fee income of $299,000, loan referral fee income of $92,000 and other fee income totaling $457,000.

Non-interest expense totaled $9.5 million for the third quarter of 2016. Compensation and benefits comprises approximately 65%, or $6.2 million, of the total non-interest expense. The Company had 161 full-time equivalent employees as of September 30, 2016.

For the third quarter of 2016, the Company's effective tax rate was 40.8% for a total tax expense of $1.9 million for the quarter.

At September 30, 2016, the Company had a tier 1 leverage capital ratio of 9.25%, common equity tier 1 capital ratio of 9.87%, tier 1 capital ratio of 9.87% and total capital ratio of 13.51%. At September 30, 2016, the Bank exceeded all regulatory capital requirements with a tier 1 leverage capital ratio of 10.86%, common equity tier 1 capital ratio of 11.57%, tier 1 capital ratio of 11.57% and total capital ratio of 12.82%. 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 capital, 8.00% for tier 1 capital and 10.00% for total capital.

Plaza Bancorp			9/30/2016			6/30/2016			12/31/2015
	Tier 1 leverage ratio		9.25	%		9.12	%		8.56	%
	Tier 1 capital ratio		9.87	%		9.76	%		9.35	%
	Common equity tier 1 capital ratio		9.87	%		9.76	%		9.35	%
	Total capital ratio		13.51	%		13.49	%		13.24	%
Plaza Bank
	Tier 1 leverage ratio		10.86	%		10.97	%		10.48	%
	Tier 1 capital ratio		11.57	%		11.74	%		11.44	%
	Common equity tier 1 capital ratio		11.57	%		11.74	%		11.44	%
	Total capital ratio		12.82	%		12.99	%		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
Consolidated Condensed Statements of Financial Condition
(Unaudited)
(dollars in thousands)				September 30,			June 30,			December 31,			September 30,
ASSETS				2016			2016			2015			2015
Cash and cash equivalents				$	138,085		$	92,203		$	97,576		$	135,225
Investment securities - available for sale					25,570			28,467			28,215			29,149
Loans held for sale					3,338			2,720			4,535			4,972
Loans held for investment					997,051			956,229			882,199			829,280
Allowance for loan losses					(12,856	)		(12,411	)		(11,506	)		(10,398	)
Net loans held for investment					984,195			943,818			870,693			818,882
Goodwill and other intangibles					9,134			9,298			9,692			9,895
Mortgage servicing rights					2,929			2,968			2,719			2,552
Indemnification asset					420			519			762			762
Accrued interest and other assets					32,108			34,020			36,540			36,737
TOTAL ASSETS				$	1,195,779		$	1,114,013		$	1,050,732		$	1,038,174
LIABILITIES AND EQUITY
Deposits
	Noninterest-bearing demand			$	295,371		$	270,000		$	316,516		$	295,096
	Savings, now and money market accounts				477,265			396,277			355,515			357,899
	Time deposits				244,407			236,617			211,998			221,863
		Total Deposits			1,017,043			902,894			884,029			874,858
Borrowings					54,720			89,712			48,696			49,000
Accrued interest and other liabilities					8,309			8,622			10,738			10,125
		Total Liabilities			1,080,072			1,001,228			943,463			933,983
Total stockholder's equity					115,707			112,785			107,269			104,191
TOTAL LIABILITIES AND EQUITY				$	1,195,779		$	1,114,013		$	1,050,732		$	1,038,174
BASIC BOOK VALUE PER SHARE				$	3.85		$	3.75		$	3.57		$	3.47
BASIC BOOK VALUE PER DILUTED SHARE				$	3.83		$	3.73		$	3.54		$	3.42
TANGIBLE BOOK VALUE PER SHARE				$	3.55		$	3.45		$	3.25		$	3.13
TANGIBLE BOOK VALUE PER DILUTED SHARE				$	3.52		$	3.42		$	3.22		$	3.09
BASIC SHARES OUTSTANDING					30,039,244			30,039,244			30,034,244			30,040,003
DILUTED SHARES OUTSTANDING					30,244,080			30,228,651			30,296,867			30,473,026
Capital Ratios:
			Tier 1 leverage ratio		9.25	%		9.12	%		8.56	%		8.27	%
			Tier 1 risk-based capital ratio		9.87	%		9.76	%		9.35	%		9.55	%
			Common equity tier 1 capital ratio		9.87	%		9.76	%		9.35	%		9.55	%
			Risk-based capital ratio		13.51	%		13.49	%		13.24	%		13.61	%

Plaza Bancorp
Consolidated Condensed Statements of Operations
(Unaudited)
		Quarter-to-Date			Quarter-to-Date			Quarter-to-Date			Year-to-Date			Year-to-Date
		September 30,			June 30,			September 30,			September 30,			September 30,
		2016			2016			2015			2016			2015 *
(dollars in thousands)
Interest income		$	14,684		$	13,685		$	12,464		$	41,553		$	38,349
Interest expense			1,705			1,598			1,462			4,792			3,561
	Net Interest Income		12,979			12,087			11,002			36,761			34,788
Provision for loan losses			494			310			209			1,391			939
Net interest income after provision for loan losses			12,485			11,777			10,793			35,370			33,849
Noninterest income			1,806			2,525			2,407			6,616			6,835
Noninterest expense			9,549			9,304			9,428			28,567			33,080
Income before income taxes			4,742			4,998			3,772			13,419			7,604
Provision for income taxes			1,933			2,043			1,636			5,332			2,639
Income from continuing operations			2,809			2,955			2,136			8,087			4,965
Loss on discontinued operations			-			-			(32	)		-			(3,698	)
Net income before noncontrolling interest in Plaza Bank			2,809			2,955			2,104			8,087			1,267
Less: Net income attributed to noncontrolling interest in Plaza Bank			-			-			-			-			(336	)
Net income		$	2,809		$	2,955		$	2,104		$	8,087		$	931
EARNINGS PER SHARE - BASIC		$	0.09		$	0.10		$	0.07		$	0.27		$	0.03
EARNINGS PER SHARE - DILUTED		$	0.09		$	0.10		$	0.07		$	0.27		$	0.03
BASIC WEIGHTED AVERAGE SHARES			30,039,244			30,038,145			29,587,799			30,037,218			29,597,394
DILUTED WEIGHTED AVERAGE SHARES			30,238,438			30,237,144			30,110,273			30,239,430			30,109,679
RETURN ON AVERAGE ASSETS			1.00	%		1.09	%		0.81	%		1.00	%		0.18	%
RETURN ON AVERAGE EQUITY			9.79	%		10.58	%		8.18	%		9.64	%		3.19	%
*Pooling of Interest with Manhattan Bancorp effected in June 2015

Plaza Bancorp
Loans Held for Investment Portfolio Composition
(Unaudited)
	September 30,				June 30,				December 31,				September 30,
	2016				2016				2015				2015
(dollars in thousands)
Construction and land development	$	11,502			$	15,259			$	12,906			$	11,394
Commercial real estate and other		606,680				569,246				522,739				506,150
Commercial		182,366				174,547				162,485				149,310
Residential real estate		136,873				138,647				131,051				112,511
Consumer		63,769				62,482				56,656				53,238
Total		1,001,190				960,181				885,837				832,603
Deferred loan fees and discounts, net of costs		(4,139	)			(3,952	)			(3,638	)			(3,323	)
Loans held for investment		997,051				956,229				882,199				829,280
Allowance for loan losses		(12,856	)			(12,411	)			(11,506	)			(10,398	)
Total net loans	$	984,195			$	943,818			$	870,693			$	818,882

Non-Performing Assets
		September 30,			June 30,			December 31,			September 30,
		2016			2016			2015			2015
(dollars in thousands)
Non-Accrual Assets
Loans (net of discounts)		$	1,768		$	866		$	1,236		$	1,716
OREO			206			206			206			206
Delinquent Loans (net of discounts)
30 - 89 days past due		$	3,461		$	492		$	3,487		$	667
90 days and greater			1,363			435			109			109