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

IRVINE, CA -- (Marketwired) -- 10/19/16 -- 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- Quarter-to- Quarter-to-   Year-to-    Year-to-
                    Date        Date        Date        Date        Date
                 September     June      September   September   September
                    30,         30,          30,         30,         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

Media Contacts:
Gene Galloway
President and Chief Executive Officer
(702) 277-2221 or (949) 502-4309
Email Contact

John Shindler
Executive Vice President and Chief Financial Officer
(949) 225-3704
Email Contact

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