Plaza Bancorp, the Holding Company of Plaza Bank, Announces Financial Results for the Year and Fourth Quarter Ended December 31, 2016 (unaudited)

IRVINE, CA--(Marketwired - Jan 25, 2017) - Plaza Bancorp (OTC PINK: PLZZ)

2016 highlights

• 16% growth in total assets to $1.2 billion
• Both loans held for investment and deposits exceed $1 billion
• Net income more than doubled in 2016

Plaza Bancorp (OTC PINK: PLZZ) (the "Company"), the holding company of Plaza Bank (the "Bank"), reported unaudited net income for the quarter ended December 31, 2016 of $3.0 million, or $0.10 per share on a diluted basis compared with $2.8 million, or $0.09 per diluted share for the third quarter of 2016. For the quarter ended December 31, 2016, the Company's annualized return on average assets was 1.02% and annualized return on average equity was 10.33%, up from an annualized return on average assets of 1.00% and an annualized return on average equity of 9.79% for the third quarter of 2016.

For the year ended December 31, 2016, the Company recorded net income of $11.1 million, or $0.37 per diluted share. For the same period in 2015, the Company recorded net income of $4.3 million, or $0.14, per diluted share. For the year ended December 31, 2016, the Company's return on average assets was 1.00% and return on average equity was 9.82%, up from a return on average assets of 0.44% and a return on average equity of 4.24% for the same period in 2015. The Company's results in 2015 included $4.9 million in merger related expenses.

Gene Galloway, Chief Executive Officer of the Company and the Bank, commented on the year's results, stating "Management is very pleased with the consistent, solid financial results for 2016 that are the direct result of our employees' efforts and dedication to the Bank. In 2016, our loans outstanding grew in each quarter, ranging from $24 million to $41 million. Interest income increased in every quarter of the year in a range from a $412,000 to $999,000. Earnings per share ranged from 8 cents in the first quarter to 10 cents in the second and fourth quarters."

Mr. Galloway concluded with, "Since the merger 18 months ago, that doubled our asset size, we have upgraded certain key personnel and our infrastructure that will result in improved efficiencies and higher earnings. We are looking forward to a very successful 2017."

Other highlights for the year or quarter ended December 31, 2016 included:

• Loans held for investment grew during the quarter and year by $24.2 million and $139.0 million, respectively, to $1.0 billion. The year over year growth is 15.8%
• Loan originations by the Bank in the fourth quarter and the year totaled $94.0 million and $377.7 million, respectively
• Net interest income increased $279,000, or 2.1%, to $13.3 million for the fourth quarter of 2016 compared to $13.0 million for the third quarter of 2016. Net interest income for the year grew $3.9 million, or 7.9%, to $50.0 million
• The Company's net interest margin ("NIM") for the quarter was 4.57% and for the year was 4.68%
• Total revenues in the fourth quarter increased $654,000, or 4.4%, to $15.4 million compared to $14.8 million for the previous quarter
• During the quarter, the Company realized a gain of $644,000 on the sale of $10.8 million of SBA 7(a) loans and one SBA 504 loan. For the year the Bank sold $47.9 million in loans for a gain $3.2 million
• Nonperforming assets net of discounts totaled $2.8 million, or 0.23% of total assets at December 31, 2016 compared to $2.0 million, or 0.17% at September 30, 2016 and $1.4 million, or 0.14% at December 31, 2015
• The ratio of allowance for loan losses to total loans held for investment was 1.27% at December 31, 2016. Including the credit discount on acquired loans of $1.6 million in the ratio, the ratio increases to 1.43%
• The Company's efficiency ratio for the quarter was 63.9% and for the year was 64.4%
• Tangible book value per share increased $0.10 to $3.65 during the fourth quarter

Net interest income for the quarter and year ended December 31, 2016 totaled $13.3 million and $50.0 million, respectively. Loan interest income for the quarter totaled $14.8 million, the average total outstanding loans for the quarter were $1,012.8 million and the annualized yield was 5.82%. Interest expense related to deposits was $1.3 million for the quarter, or 0.51% annualized. The interest expense related to the subordinated debentures for the quarter was $453,000, or 7.245% annualized.

The Company recorded a $243,000 provision for loan losses during the fourth quarter of 2016 principally as a result of the $24.2 million growth in loans held for investment. For the fourth quarter, total charge-offs were $145,000 and recoveries were $4,000. For the year ended December 31, 2016, the Company recorded a total provision for loan losses of $1.6 million and net charge-offs of $173,000.

Non-accrual loans net of discounts totaled $2.6 million at December 31, 2016 of which $1.4 million is covered under a Federal Deposit Insurance Corporation (FDIC) share-loss agreement or SBA guaranty. At December 31, 2015, the non-accrual loans net of discounts totaled $1.2 million with $534,000 of the non-accrual loans covered under a FDIC share-loss agreement or SBA guaranty.

Non-interest income for the fourth quarter of 2016 was $2.2 million. Non-interest income for the fourth quarter is primarily comprised of a net gain from the sale of loans of $644,000, loan servicing income of $400,000, deposit fee income of $279,000, partial reversal of the allowance for single family loans sold of $400,000, loan referral fee income of $58,000 and other fee income totaling $403,000.

Non-interest expense totaled $10.0 million for the fourth quarter of 2016. Compensation and benefits comprises approximately 64%, or $6.5 million, of the total non-interest expense. The Company had 159 full-time equivalent employees as of December 31, 2016.

The Company's effective tax rate for the fourth quarter was 41.0% and for the year of 2016 was 40.1%, for a total tax expense of $2.1 million for the quarter and $7.5 million for the year.

Total loans held-for-investment, net of the allowance for loan losses, grew 2% to $1.0 billion at December 31, 2016 from $997.1 million at September 30, 2016 and grew 16% from $882.2 million at December 31, 2015. At December 31, 2016, the Company's unfunded commitments on originated loans totaled $170.0 million.

Total deposits decreased $12.5 million, or 1%, to $1.0 billion as of December 31, 2016, from $1.0 billion as of September 30, 2016, and increased 14% from $884.0 million as of December 31, 2015.

FHLB advances increased to $60.0 million as of December 31, 2016 compared to $30.0 million as of September 30, 2016, and $24.0 million at December 31, 2015.

At December 31, 2016, the Company had total regulatory capital on a consolidated basis of approximately $118.7 million, and the Bank had total regulatory capital of approximately $136.0 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 December 31, 2016, 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 December 31, 2016:

Plaza Bancorp			12/31/2016		9/30/2016		12/31/2015
	Tier 1 leverage ratio		8.93%		9.25%		8.56%
	Tier 1 capital ratio		9.78%		9.87%		9.35%
	Common equity tier 1 capital ratio		9.78%		9.87%		9.35%
	Capital ratio		13.33%		13.51%		13.24%
Plaza Bank
	Tier 1 leverage ratio		10.44%		10.86%		10.48%
	Tier 1 capital ratio		11.38%		11.57%		11.44%
	Common equity tier 1 capital ratio		11.38%		11.57%		11.44%
	Capital ratio		12.63%		12.82%		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.

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, except per share amounts)				December 31,				September 30,				December 31,
ASSETS				2016				2016				2015
Cash and cash equivalents				$	137,095			$	138,085			$	97,576
Investment securities - available for sale					23,117				25,570				28,215
Loans held for sale					6,227				3,338				4,535
Loans held for investment					1,021,203				997,051				882,199
Allowance for loan losses					(12,966	)			(12,856	)			(11,506	)
Net loans held for investment					1,008,237				984,195				870,693
Accrued interest receivable					3,815				3,579				3,201
Other real estate owned					206				206				206
Premises and equipment					7,786				7,826				7,581
Deferred income tax					10,852				10,384				15,174
Goodwill and other intangibles					8,963				9,134				9,692
Mortgage servicing rights					2,963				2,929				2,719
Indemnification asset					326				420				762
Other assets					9,934				10,113				10,378
TOTAL ASSETS				$	1,219,521			$	1,195,779			$	1,050,732
LIABILITIES AND EQUITY
Deposits
	Noninterest-bearing demand			$	311,026			$	295,371			$	316,516
	Savings, now and money market accounts				453,009				477,265				355,515
	Time deposits				240,515				244,407				211,998
		Total Deposits			1,004,550				1,017,043				884,029
Borrowings					84,728				54,720				48,696
Accrued interest and other liabilities					11,550				8,309				10,738
		Total Liabilities			1,100,828				1,080,072				943,463
Total stockholders' equity					118,693				115,707				107,269
TOTAL LIABILITIES AND EQUITY				$	1,219,521			$	1,195,779			$	1,050,732
BASIC BOOK VALUE PER SHARE				$	3.95			$	3.85			$	3.57
BASIC BOOK VALUE PER DILUTED SHARE				$	3.91			$	3.83			$	3.54
TANGIBLE BOOK VALUE PER SHARE				$	3.65			$	3.55			$	3.25
TANGIBLE BOOK VALUE PER DILUTED SHARE				$	3.61			$	3.52			$	3.22
BASIC SHARES OUTSTANDING					30,039,244				30,039,244				30,034,244
DILUTED SHARES OUTSTANDING					30,393,232				30,244,080				30,296,867
Capital Ratios:
	Tier 1 leverage ratio				8.93	%			9.25	%			8.56	%
	Tier 1 risk-based capital ratio				9.78	%			9.87	%			9.35	%
	Common equity tier 1 capital ratio				9.78	%			9.87	%			9.35	%
	Risk-based capital ratio				13.33	%			13.51	%			13.24	%

Plaza Bancorp
Consolidated Condensed Statements of Operations
(Unaudited)
			Quarter- to-Date			Quarter- to-Date			Quarter- to-Date			Year- to-Date			Year- to-Date
			December 31, 2016			September 30, 2016			December 31, 2015			December 31, 2016			December 31, 2015*
(dollars in thousands, except per share amounts)
Interest income			$	15,096		$	14,684		$	12,722		$	56,648		$	51,071
Interest expense				1,838			1,705			1,429			6,630			4,990
		Net interest income		13,258			12,979			11,293			50,018			46,081
Provision for loan losses				243			494			1,428			1,634			2,367
Net interest income after provision for loan losses				13,015			12,485			9,865			48,384			43,714
Non-interest income:
	Loan servicing and other fees			400			333			285			1,439			892
	Bank and other fee income			279			299			300			1,180			1,637
	Net gain from loan sales			644			625			1,039			3,176			3,551
	Other income			858			549			1,419			3,002			3,800
		Total non-interest income		2,181			1,806			3,043			8,797			9,880
Non-interest expense:
	Compensation and benefits			6,473			6,216			5,686			25,100			23,452
	Premises and occupancy			1,241			926			957			4,363			4,370
	Data processing			660			607			590			2,493			2,818
	Other real estate owned expenses			2			-			55			2			56
	FDIC insurance premiums			39			128			130			451			802
	Professional fees			753			709			356			2,645			5,662
	Marketing expense			134			217			194			713			929
	Other expenses			736			746			823			2,837			3,835
		Total non-interest expense		10,038			9,549			8,791			38,604			41,924
Income before income taxes				5,158			4,742			4,117			18,577			11,670
Provision for income taxes				2,117			1,933			722			7,449			4,852
	Income from continuing operations			3,041			2,809			3,395			11,128			6,818
Discontinued operations
	Loss on discontinued operations			-			-			4			-			(3,643	)
	Income tax provision/(benefit)			-			-			1			-			(1,490	)
		Loss discontinue operations		-			-			3			-			(2,153	)
Net income before noncontrolling interest in Plaza Bank				3,041			2,809			3,398			11,128			4,665
Less: Net income attributed to noncontrolling interest in Plaza Bank				-			-			-			-			(336	)
Net income			$	3,041		$	2,809		$	3,398		$	11,128		$	4,329
EARNINGS PER SHARE - BASIC			$	0.10		$	0.09		$	0.11		$	0.37		$	0.15
EARNINGS PER SHARE - DILUTED			$	0.10		$	0.09		$	0.11		$	0.37		$	0.14
BASIC WEIGHTED AVERAGE SHARES				30,039,244			30,039,244			30,038,188			30,037,218			29,708,498
DILUTED WEIGHTED AVERAGE SHARES				30,315,516			30,238,438			30,301,593			30,257,686			30,035,088
RETURN ON AVERAGE ASSETS				1.02	%		1.00	%		1.30	%		1.00	%		0.44	%
RETURN ON AVERAGE EQUITY				10.33	%		9.79	%		12.83	%		9.82	%		4.24	%

*Pooling of Interest with Manhattan Bancorp effected in June 2015

Plaza Bancorp
Loans Held for Investment Portfolio Composition
(Unaudited)
		December 31,				September 30,				December 31,
		2016				2016				2015
(dollars in thousands)
Construction and land development		$	10,574			$	11,502			$	12,906
Commercial real estate and other			637,932				606,680				522,739
Commercial			181,115				182,366				162,485
Residential real estate			125,248				136,873				131,051
Consumer			70,148				63,769				56,656
Total			1,025,017				1,001,190				885,837
Deferred loan fees, net of costs			(3,814	)			(4,139	)			(3,638	)
Loans held for investment			1,021,203				997,051				882,199
Allowance for loan losses			(12,966	)			(12,856	)			(11,506	)
Total net loans		$	1,008,237			$	984,195			$	870,693

Non-Performing Assets
		December 31,			September 30,			December 31,
		2016			2016			2015
(dollars in thousands)
Non-Accrual Assets
Loans (net of discounts)		$	2,579		$	1,768		$	1,236
OREO			206			206			206
Delinquent Loans (net of discounts)
30 - 89 days past due		$	2,978		$	3,461		$	3,487
90 days and greater (included in non-accrual)			1,713			1,363			109