US Metro Bank (OTC Pink: USMT) Mr. Dong Il Kim, President and CEO, announced the bank’s financial results for the fourth quarter 2018, reporting net income of $829,000 for the three months ending December 31, 2018 compared to $480,000 reported for the same three months in 2017, an year over year increase of 73%. Earnings per share (EPS) of $0.05 per share on 16,230,000 shares for the quarter ended December 31, 2018 compares to EPS of $0.03 per share on 16,230,000 shares for the same time period in 2017. The 2018 earnings reflect the lower federal tax rate, effective January 1, 2018.

The Bank reported total assets of $389.1 million as of December 31, 2018, representing a 19.6% increase compared to the reporting period ending December 31, 2017 and a 5.0% increase over the third quarter 2018. In 2017 the Bank opened a branch office on April 3, 2017 on Wilshire Boulevard in Koreatown, Los Angeles and a Loan Production Office (LPO) on June 15, 2017 in Seattle, Washington. A new branch in downtown Los Angeles’ Fashion District opened on November 1, 2017. On December 5, 2018 a fifth branch was opened in Buena Park, California. As of December 31, 2018 the Wilshire branch recorded a total deposit base of $75.2 million including $12.0 million in non-interest bearing deposits. The Fashion District Branch had $45.4 million in total deposits at December 31, 2018 including $11.1 million in non-interest bearing deposits and the new Buena Park Branch recorded a deposit base of $22.7 million. Total Bank loans totaled $289.5 million compared to $218.5 million a year earlier at December 31, 2017, a 32.5% increase and increased from $262.3 million at September 30, 2018, a 10.4% increase. Total Bank deposits ended the quarter at $332.8 million, a 23.7% increase from $269.1 million at December 31, 2017 and compares to $315.6 million at September 30, 2018, a 5.5% increase.

SBA loan originations for the quarter ending December 31, 2018 were $14.8 million compared to $9.1 million for the third quarter in 2018. The Bank sold $9.0 million in SBA loans for a net gain of $0.5 million for the quarter ended December 31, 2018 compared to $20.4 million in SBA loan sales and a net gain of $1.4 million for the quarter ended December 31, 2017.

Loan quality remains good with non-performing assets as a percent of total assets of 0.07% compared to 0.06% as of December 31, 2017. The Bank had no Other Real Estate Owned at December 31, 2018. Allowance for loan and lease losses (ALLL) to gross loans has decreased from 1.52% as of December 31, 2017 to 1.35% as of December 31, 2018. The reason for the decrease is a 32.5% annual growth in loans from December 31, 2017. Accordingly the Bank booked $960,000 of provision expense during 2018 as a result of the loan growth.

“The Board of Directors is pleased with the continued growth and profitability of the Bank while absorbing the new Wilshire Branch, Seattle LPO, the Fashion District Branch in Downtown Los Angeles and most recently the new Buena Park Branch,” said CEO Kim. “We are excited about the planned growth of the Bank in 2019 and look forward to the continuing profitable deployment of our new capital.”

US Metro Bank is a California chartered, full service commercial nonmember bank headquartered in Garden Grove, California with five branch offices in California - Garden Grove, Anaheim, Buena Park, Koreatown/Los Angeles, Fashion District/Los Angeles and loan production offices in Dallas, Texas and Seattle, Washington. The Bank opened for business on September 15, 2006, and offers deposit and loan products (including commercial real estate, commercial and industrial and SBA loans), as well as related banking services to its targeted client base of executives, professionals, and small to medium-sized businesses, generally in the Southern California area.

This release contains forward-looking statements, including our expectations with respect to future events that are subject to various risks and uncertainties. Factors that could cause actual results to differ materially from management's projections, forecasts, estimates and expectations include: fluctuation in market rates of interest and loan and deposit pricing, adverse changes in the overall national economy as well as adverse economic conditions in our specific market areas, maintenance and development of well-established and valued client relationships and referral source relationships, and acquisition or loss of key production personnel. Other risks that can affect the Bank are detailed from time to time in our annual reports. We caution readers that the list of factors above is not exclusive. The forward-looking statements are made as of the date of this release, and we may not undertake steps to update the forward-looking statements to reflect the impact of any circumstances or events that arise after the date the forward-looking statements are made. In addition, our past results of operations are not necessarily indicative of future performance.

FINANCIAL HIGHLIGHTS (unaudited)
 

(All dollar amounts in thousands)

        
  At or for the Three Months Ended
    12/31/2018       9/30/2018       % Change       12/31/2017     % Change  
Net Income $ 829 $ 970 -14.54 % $ 480 72.71 %
Net Income Per Share (Basic) $ 0.05 $ 0.06 -16.67 % $ 0.03 66.67 %
ROAA (Annualized) 0.83 % 1.08 % -0.24 % 0.66 % 0.17 %
ROAE (Annualized) 6.34 % 7.55 % -1.21 % 3.93 % 2.41 %
Assets $ 389,110 $ 370,728 4.96 % $ 325,326 19.61 %
Gross Loans $ 289,529 $ 262,285 10.39 % $ 218,490 32.51 %
Net Loans $ 285,631 $ 258,517 10.49 % $ 215,173 32.74 %
Deposits $ 332,797 $ 315,611 5.45 % $ 269,093 23.67 %
Non-Interest Bearing Deposits $ 69,063 $ 71,266 -3.09 % $ 54,355 27.06 %
Efficiency Ratio 67.24 % 63.62 % 3.62 % 60.93 % 6.30 %
Net Interest Margin 4.07 % 4.31 % -0.25 % 4.12 % -0.05 %
 
 
BALANCE SHEET (unaudited)              

(All amounts in thousands except per share information)

        
Assets   12/31/2018       12/31/2017     Y-O-Y Change
Cash and Due From Bank $ 12,194 $ 13,381 $ (1,187 ) -8.9 %
Investments and Fed Funds Sold $ 80,882 $ 87,123 (6,241 ) -7.2 %
Loans Outstanding 289,529 218,490 71,039 32.5 %
Loan Loss Reserve (3,898 ) (3,317 ) (581 ) 17.5 %
Other Assets   10,403     9,649     754     7.8 %
Total Assets $ 389,110   $ 325,326   $ 63,784     19.6 %
               
Liabilities and Capital   12/31/2018       12/31/2017     Y-O-Y Change
Deposits $ 332,797 $ 269,093 $ 63,704 23.7 %
Borrowings 1,500 6,500 (5,000 ) N/A
Other Liabilities 2,170 974 1,196 122.8 %
Equity   52,643     48,759     3,884     8.0 %

Total Liabilities and Capital

 $ 389,110   $ 325,326   $ 63,784     19.6 %
 
STATEMENT OF OPERATIONS Three Months Ended
Income Statement   12/31/2018       12/31/2017     Q-O-Q Change
Interest Income $ 5,048 $ 3,373 $ 1,675 49.7 %
Interest Expense   1,180     520     660     126.9 %
Net Interest Income   3,868     2,853     1,015     35.6 %

Provision for Loan Losses

300

-

300

N/A
Other Income 1,058 1,762 (704 ) -40.0 %
Operating Expenses 3,312 2,812 500 17.8 %
Tax   485     1,323     (838 )   -63.3 %
Net Income $ 829   $ 480   $ 349     72.7 %
Net Income Per Share (Basic) $ 0.05 $ 0.03
Ending Common Shares O/S 16,230,000 16,230,000
 
STATEMENT OF OPERATIONS Twelve Months Ended
Income Statement   12/31/2018       12/31/2017     Y-O-Y Change
Interest Income $ 17,609 $ 11,221 $ 6,388 56.9 %
Interest Expense   3,406   $ 1,656     1,750     105.7 %
Net Interest Income   14,203     9,565     4,638     48.5 %

Provision for Loan Losses

960

-

(960

) N/A
Other Income 4,851 7,024 (2,173 ) -30.9 %
Operating Expenses 12,271 9,954 2,317 23.3 %
Tax   1,972     (65 )   2,037     NM  
Net Income* $ 3,851   $ 6,700   $ (929 )   -13.9 %
Net Income Per Share (Basic) $ 0.24 $ 0.41
Ending Common Shares O/S 16,230,000 16,230,000
           
Ratios   12/31/2018       12/31/2017     Y-O-Y Change
Net Loan to Deposits 85.83 % 79.96 % 5.87 %
ALLL/Gross Loans 1.35 % 1.52 % -0.17 %
NPAs/Total Assets 0.07 % 0.06 % 0.02 %
Tier One Leverage Ratio 12.74 % 16.10 % -3.35 %
Book Value Per Share (Basic) $ 3.24 $ 3.00 $ 0.24
YTD ROAA (annualized) 1.09 % 2.66 % -1.58 %
YTD ROAE (annualized) 7.57 % 15.59 % -8.02 %
 
* 2017 Net Income reflects the tax benefit from reversing a $3.5 million valuation allowance for the deferred tax asset.