GlobeNewswire Inc | Oct 20, 2020 09:00AM EDT

October 20, 2020

Current Quarter Highlights

-- Net income of $7.9 million, up 37.5% over Q2'20 -- Diluted earnings per common share of $0.67, up 36.7% over Q2'20 -- Pre-tax pre-provision income was $12.1 million, up 18.3% from Q2'20 -- Net interest margin of 4.05%, down 7 bps from Q2'20 -- Cost of funds of 0.29%, down 5 bps from Q2'20, due to active balance sheet management -- Return on average assets and average equity of 1.39% and 11.57% -- Efficiency ratio of 48.7% -- Provision for loan loss expense of $1.0 million, down $1.1 million from Q2'20 -- Total loans held for investment increased $53.3 million, up 2.9% over Q2'20 -- Noninterest-bearing demand deposits were $736.1 million, representing 47.2% of total deposits -- Tangible book value per share of $16.56, up $0.47 per share from Q2'20 -- Community bank leverage ratio (preliminary) was10.29% at September 30, 2020 -- Quarterly cash dividend of $0.25 per share

COVID-19 Updates

-- At September 30, 2020, non Paycheck Protection Program ("PPP") loans granted a 90-day principal and/or interest deferment totaled $37 million, down from $626 million at June 30, 2020 -- Over 97% of non-PPP loans that were granted a deferral have resumed regular payments or paid off -- Five loans totaling $12 million have been granted a second 90-day deferment -- Total outstanding principal before unearned fees of PPP loans was $400.1 million at September 30, 2020 -- No PPP loans were forgiven as of September 30, 2020 -- Originated four Main Street loans totaling $69.8 million and sold 95% of principal to Main Street Lending Facilities, resulting in a gain on sale of $486 thousand during Q3'20 -- All branches opened with appropriate safety precautions in place -- Continue to leverage technology to increase operational efficiency and employee productivity

Cerritos, CA, Oct. 20, 2020 (GLOBE NEWSWIRE) -- First Choice Bancorp (NASDAQ: FCBP) ("us," "we," "our," or the "Company"), the holding company of First Choice Bank (the "Bank"), today reported net income of $7.9 million for the third quarter of 2020, or $0.67 per diluted share, compared to net income of $5.7 million, or $0.49 per diluted share, for the second quarter of 2020. Pre-tax pre-provision income was $12.1 million for the third quarter of 2020, an increase of $1.9 million, compared to the pre-tax pre-provision income of $10.3 million for the second quarter of 2020.

Our third quarter results demonstrate the progress we have made transforming First Choice into a community-focused commercial bank that can provide financial solutions to our clients and financial performance to our shareholders, said Peter Hui, Chairman of the Board. While uncertainty remains, we believe our management experience, capital strength and focus on providing exceptional customer service position us to increase our market share over the coming months.

The promising trends we observed last quarter continued as 97% of deferred loans returned to regular payment schedules, operating leverage drove a 49% efficiency ratio, our net interest margin remained above 4% and we made progress increasing our market share in the Southern California market, said Robert M. Franko, President and CEO of the Company. We acted quickly to offer the Main Street Lending Program to eligible borrowers and believe it represents an attractive and profitable opportunity to assist new and existing clients, despite some of the well-known operating issues associated with the program. While we are concerned by the recent economic and social turmoil, we believe we can best serve our clients, our communities and our shareholders by continuing to act as a pillar of financial stability in the Southern California markets in which we operate.

STATEMENT OF INCOME

Net Interest Income

Net interest income for the third quarter of 2020 totaled $21.7 million, an increase of $1.4 million from the second quarter of 2020 due to higher interest income of $1.3 million, coupled with lower interest expense of $112 thousand. The increase in net interest income was due primarily to higher discount accretion from loans acquired in a business combination, full quarter impact of interest income from PPP loans, strong organic loan growth, and lower cost of interest-bearing time deposits. Average loans increased by $154.3 million from organic loan growth and PPP loans in the third quarter of 2020. The decrease in interest expense for the third quarter of 2020 was due primarily to a higher run-off of high cost time deposits and the Company's proactive strategy to lower the cost of interest-bearing customer deposits and wholesale brokered CDs. Interest expense on interest-bearing deposits decreased $204 thousand, partially offset by an increase of $92 thousand on total borrowings. Interest expense on the PPP Liquidity Facility ("PPPLF") was $212 thousand for the third quarter of 2020, compared to $112 thousand in the second quarter of 2020 due to higher average borrowings.

Net Interest Margin

Net interest margin for the third quarter of 2020 decreased 7 basis points to 4.05% from 4.12% for the second quarter of 2020.

The decrease in the net interest margin was due primarily to a 17 basis point decrease in loan yields (including fees and discounts), partially offset by a 5 basis point decrease in total funding costs. The decrease in loan yields were partially offset by higher accelerated discount accretion in the third quarter of 2020. The discount accretion from loans acquired in a business combination of $835 thousand contributed 16 basis points to the net interest margin in the third quarter of 2020 compared to $421 thousand and 9 basis points in the second quarter of 2020.

The decrease in the interest-earning assets yield and loan yield were driven by the lower market interest rates and the lower-yielding PPP loans. The yield on loans decreased to 4.77% for the third quarter of 2020, compared to 4.94% for the second quarter of 2020. The weighted average loan yield for PPP loans was 2.66%, which lowered the total loan yield by 54 basis points for the third quarter of 2020, compared to 46 basis points for the second quarter of 2020.

The cost of funds decreased to 0.29% for the third quarter of 2020, compared to 0.34% for the second quarter of 2020, due primarily to lower market interest rates, runoff of higher cost time deposits and active balance sheet management. Average noninterest-bearing demand deposits decreased $53.0 million to $730.3 million and represented 46.5% of total average deposits for the third quarter of 2020, compared to $783.3 million, or 50.7% of total average deposits, for the second quarter of 2020. The decrease in average noninterest-bearing demand deposits was primarily due to our customers' use of funds during the third quarter of 2020 for the new deposit accounts opened for PPP loans in the second quarter of 2020. The total cost of deposits decreased 6 basis points to 0.25% for the third quarter of 2020, compared to 0.31% for the second quarter of 2020.

Average borrowings increased $7.3 million to $152.8 million, coupled with an increase of $112.6 million in average PPPLF outstanding with an average rate of 0.35% to support the PPP loans funded. The average cost of total borrowings remained relatively flat at 0.54% for the third quarter of 2020. Average senior secured notes decreased $2.1 million to $4.6 million and the average cost of such borrowings decreased 3 basis points to 3.36% for the third quarter of 2020.

Provision for Loan Losses

The provision for loan losses for the third quarter of 2020 decreased $1.1 million to $1.0 million, compared to $2.1 million for the second quarter of 2020. The driver for the third quarter provision was organic growth in the loan portfolio. While the economy gradually reopened in the second quarter of 2020, the timing of an economic recovery continues to remain uncertain. The assumptions underlying the COVID-19 related qualitative factors included (a) uncertain and volatile macro-economic conditions caused by the pandemic; (b) a stabilized unemployment rate; and (c) the loan deferment program and Main Street Lending Program. No provision for loan losses was taken on PPP loans as the SBA guarantees 100% of loan principal under the program.

Noninterest Income

Noninterest income for the third quarter of 2020 was $1.9 million, an increase of $888 thousand from $1.1 million for the second quarter of 2020 due primarily to higher gains on loan sales of $990 thousand and higher net servicing fees of $237 thousand, partially offset by lower other income of $387 thousand. SBA loans sold during the third quarter of 2020 totaled $6.2 million resulting in a gain on sale of $504 thousand. Gains on loan sales for the third quarter of 2020 also included the sale of 95% of the principal balance of Main Street loans resulting in gains of $486 thousand. There were no gains on loan sales in the second quarter of 2020. The $237 thousand increase in net servicing fees was due primarily to lower amortization of servicing asset from early loan pay-offs which totaled $68 thousand for the third quarter of 2020 compared to $277 thousand for the second quarter of 2020. Other income decreased $387 thousand for the third quarter of 2020 due to $153 thousand gain on sale of foreclosed assets and $233 thousand Community Development Financial Institutions Bank Enterprise Award (CDFI BEA) recognized in the second quarter of 2020. There was no similar income in the third quarter of 2020.

Noninterest Expense

Noninterest expense increased $428 thousand to $11.5 million for the third quarter of 2020 from $11.1 million for the second quarter of 2020. This increase was due primarily to higher salaries and employee benefit expenses, higher FDIC assessment fees, offset by lower loan related expenses, lower customer service related expenses, and lower other expenses.

The $740 thousand increase in salaries and employee benefits was due to higher incentive accruals resulting from an increase in organic loan production in the third quarter of 2020. The $188 thousand increase in FDIC assessment fees was due primarily to the organic growth in the total assets during the third quarter of 2020.

The $167 thousand decrease in loan related expenses was due primarily to a recovery of expenses in the third quarter of 2020 and lower expense incurred for the roll-out of PPP loans in the third quarter of 2020. The $247 thousand decrease in customer service related expenses was due primarily to lower average demand deposits for certain deposit accounts during the third quarter of 2020. The decrease in other expenses resulted from no provision for unfunded loan commitments recognized in the third quarter of 2020 compared to a $300 thousand provision for unfunded loan commitments in the second quarter of 2020. Total unfunded loan commitments decreased $2.5 million to $390.9 million at September 30, 2020 from $393.4 million at June30, 2020.

The efficiency ratio remained favorable and decreased to 48.7% in the third quarter of 2020, compared to 52.0% in the second quarter of 2020. The lower efficiency ratio in the third quarter of 2020 was driven by higher revenue including the gains from SBA and Main Street loan sales.

Income Taxes

Income tax expense was $3.3 million for the third quarter of 2020 compared to $2.4 million for the second quarter of 2020. The effective tax rate was 29.3% for the third quarter of 2020 and 29.8% for the second quarter of 2020. The effective tax rate for the full year of 2020 is expected to be in the range of 29% to 30%.

STATEMENT OF FINANCIAL CONDITION

Loan Portfolio

Total loans held for investment increased $53.3 million in the third quarter of 2020, or 2.9%, to $1.88 billion at September 30, 2020 due primarily to the organic loan growth and the Company's participation in the Main Street Lending program. Loans held for sale increased $16.1 million to $36.5 million as the Company continued to originate new SBA 7a loans in the third quarter of 2020.

New loan commitments from organic growth, excluding PPP loans, totaled $226.2 million for the third quarter of 2020, compared to $94.3 million for the second quarter of 2020. The third quarter new loan commitments included $47.3 million in construction and commercial real estate loans, $119.0 million in commercial and industrial loans, $23.4 million in SBA loans held for investment and $36.5 million of SBA loans held for sale. Total unfunded loan commitments decreased $2.5 million to $390.9 million at September 30, 2020 from $393.4 million at June30, 2020 due to higher utilization on existing lines of credit. During the third quarter of 2020, borrower drawdown on existing lines of credit totaled $59.4 million, partially offset by repayments and new commitments.

PPP Loans

PPP loans, net of unearned fees of $9.9 million, totaled $390.2 million at September 30, 2020. The unearned fees are being accreted to income based on the two-year contractual maturity. The SBA did not act on any PPP loan forgiveness applications in the third quarter of 2020 and, accordingly, no PPP loans were forgiven in the quarter. The Company anticipates that the SBA may begin making determination as to PPP forgiveness applications in the fourth quarter of 2020 through the first quarter of 2021, at which point the recognition of fee income will be accelerated.

For loans originated under the SBA's PPP loan program, interest and principal payment on these loans were originally deferred for six months following the funding date, during which time interest would continue to accrue. On October 7, 2020, the Paycheck Protection Program Flexibility Act of 2020 (Flexibility Act) extended the deferral period for borrower payments of principal, interest, and fees on all PPP loans to the date that the SBA remits the borrowers loan forgiveness amount to the lender (or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrowers loan forgiveness covered period). The extension of the deferral period under the Flexibility Act automatically applied to all PPP loans. At September 30, 2020, the entire portfolio of PPP loans are expected to have the 10 months extension until the loan is forgiven by the SBA.

Main Street Lending Program

The Company participated in the Main Street Lending Program to support lending to small and medium-sized businesses that were in sound financial condition before the onset of the COVID-19 pandemic. Under this program, the Bank originates loans to borrowers meeting the terms and requirements of the program, including requirements as to eligibility, use of proceeds and priority, and sells a 95% participation interest in these loans to Main Street Facilities, LLC, a special purpose vehicle ("SPV") organized by the Federal Reserve to purchase the participation interest from eligible lenders, including the Bank.

During the third quarter of 2020, the Bank originated four Main Street loans totaling $69.8 million in principal amount and sold participation interest totaling $66.3 million to the Main Street SPV, resulting in a gain on sale of $486 thousand.

Loan Deferrals

At September 30, 2020, the Company had 12 non-PPP loans totaling $37 million on payment deferral for COVID-related reasons, down from $626 million at June 30, 2020. Over 97% of loans that were granted a deferral have resumed making regular, contractually agreed-upon payments or were paid off. As a part of the CARES Act, the SBA is paying six months of loan payments for the Companys SBA 7a borrowers. One deferred payment loan is reported as past due, two are reported as nonaccrual and none are reported as troubled debt restructurings ("TDRs") under Section 4013 of the CARES Act.

Deposits

Total deposits decreased $45.1 million from the prior quarter to $1.56 billion at September 30, 2020 due to a decrease in noninterest-bearing deposit accounts and time deposit accounts, partially offset by increases in interest-bearing nonmaturity deposits.

At September 30, 2020, noninterest-bearing deposits totaled $736.1 million, a decrease of $53.7 million in the third quarter of 2020, of which $45 million of the decrease was due to the customers' use of PPP funds during the third quarter of 2020. Interest-bearing nonmaturity deposits increased $28.9 million due primarily to an increase in brokered deposits. Noninterest-bearing deposits were $736.1 million and represented 47.2% of total deposits at September 30, 2020, compared to $789.8 million and 49.2% of total deposits at June30, 2020.

Time deposits decreased $20.3 million due to a decrease in higher rate customer time deposits which matured in the third quarter of 2020, coupled with a decrease in brokered time deposits. At September 30, 2020, brokered time deposits totaled $101.3 million, compared to $115.5 million at June30, 2020.

Borrowings

At September 30, 2020, the Company had $253.1 million in borrowings under the PPPLF with a fixed-rate of 0.35% which was collateralized by PPP loans. The Company also participated in the FHLB San Francisco's new Recovery Advance loan program for $10 million at zero percent interest at September 30, 2020 with maturity dates in November 2020 and May 2021.

Credit Quality

Nonperforming loans increased to $13.0 million at September 30, 2020, compared to $8.4 million at June30, 2020, and represented 0.69% and 0.46% of total loans held for investment, respectively. The increase in nonperforming loans was due to two loans from one relationship totaling $5 million, which were downgraded to nonaccrual during the third quarter of 2020. These loans represent completed construction loans on two high quality ocean view homes in Malibu, California with recent appraisals indicating less than 50% Loan-to-Appraised Value. There were no loans over 90 days past due that were still accruing interest at September 30, 2020. Net charge-offs for the third quarter of 2020 were $88 thousand, or 0.02% of average loans on an annualized basis, compared to $496 thousand or 0.11% of average loans on an annualized basis for the second quarter of 2020. In the third quarter of 2020, the Company sold all of its foreclosed assets. Nonperforming assets totaled $13.0 million at September 30, 2020, compared to $9.0 million at June30, 2020, and represented 0.58% and 0.41% of total assets, respectively.

Loan delinquencies (30-89 days past due) totaled $1.2 million at September 30, 2020, compared to $353 thousand at June30, 2020. Deferred payment loans which met the requirement under Section 4013 of the CARES Act are not considered past due or TDRs.

The allowance for loan losses increased 5.1% to $18.7 million and represented 0.99% of total loans held for investment and 144.2% of nonperforming loans at September 30, 2020, compared to 0.97% and 211.8% at June30, 2020, respectively. The allowance for loan losses as a percentage of total loans held for investment excluding PPP loans, was 1.25% at September 30, 2020. At September 30, 2020, the net carrying value of acquired loans totaled $173.8 million and included a remaining net discount of $4.3 million. The discount is available to absorb losses on the acquired loans and represented 2.5% of the net carrying value of acquired loans and 0.22% of total gross loans held for investment.

CAPITAL POSITION

Capital Ratios

The Bank opted into the Community Bank Leverage Ratio ("CBLR") framework, beginning with the Call Report filed for the first quarter of 2020. The CBLR replaces the risk-based and leverage capital requirements in the generally applicable capital rules. The minimum CBLR was originally 9%, however, on April 23, 2020, the federal banking regulators, implementing the applicable provisions of the CARES Act, issued interim rules which modified the CBLR framework so that: (i) beginning in the second quarter 2020 and until the end of the year, a banking organization that has a leverage ratio of 8% or greater and meets certain other criteria may elect to use the CBLR framework; and (ii) community banking organizations will have until January 1, 2022, before the CBLR requirement is re-established at greater than 9%. Under the interim rules, the minimum CBLR is 8% beginning in the second quarter and for the remainder of calendar year 2020, 8.5% for calendar year 2021, and 9% thereafter. The interim rules also maintain a two-quarter grace period for a qualifying community banking organization whose leverage ratio falls no more than 1% below the applicable community bank leverage ratio. In addition, assets originated under the PPP and covered loans pledged under the PPPLF are deducted from the average total consolidated assets for purposes of calculating the CBLR. However, such assets are included in total consolidated assets for purposes of determining the eligibility to opt into the CBLR framework.

At September 30, 2020, the Bank's preliminary CBLR ratio was 10.29% which exceeded all regulatory capital requirements under the CBLR framework and, accordingly, the Bank was considered to be well-capitalized.

Stock Repurchase Program

The Company suspended the stock repurchase program on March 17, 2020. During the third and second quarter of 2020, there were no repurchases of common stock. The remaining number of shares authorized to be repurchased under this program was 695,489 shares at September 30, 2020. Suspending the stock repurchase program allows the Company to preserve capital and provide liquidity during the COVID-19 pandemic to meet the credit needs of the Companys customers, as well as support small businesses and the local economies served by the Company through the Bank's lending and other important services.

About First Choice Bancorp

First Choice Bancorp, headquartered in Cerritos, California, is the sole shareholder of and the registered bank holding company for, First Choice Bank. As of September 30, 2020, First Choice Bancorp had total consolidated assets of $2.26 billion. First Choice Bank, also headquartered in Cerritos, California, is a community-based financial institution that serves primarily commercial and consumer clients in diverse communities and specializes in loans to small- to medium-sized businesses and private banking clients, commercial and industrial loans, and commercial real estate loans. First Choice Bank is a Preferred Small Business Administration (SBA) Lender. First Choice Bank conducts business through nine full-service branches and two loan production offices located in Los Angeles, Orange and San Diego Counties. Founded in 2005, First Choice Bank has quickly become a leading provider of financial services that enable our customers to grow, maintain strength, and achieve their business objectives. We strive to surpass our clients expectations through our efficiency, personalized services and financial solutions and professionalism and are committed to being First in Speed, Service, and Solutions. First Choice Bank is a strong believer in social justice and equality and is proud of its cultural- and gender-diverse workforce. As of September 30, 2020, more than 71% of the Company's total workforce identified as ethnic minorities and more than 66% of its workforce and more than 50% of its senior management identified as female. First Choice Bancorp stock is traded on the Nasdaq Capital Market under the ticker symbol FCBP.

First Choice Banks website is www.FirstChoiceBankCA.com.

Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures in addition to results presented in accordance with GAAP. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's results of operations and financial condition and to enhance investors' overall understanding of such results of operations and financial condition, permit investors to effectively analyze financial trends of our business activities, and enhance comparability with peers across the financial services sector. These non-GAAP financial measures are not a substitute for GAAP measures and should be read in conjunction with the Companys GAAP financial information. A reconciliation of GAAP financial measures to non-GAAP financial measures is included in the accompanying financial tables.

Forward-Looking Statements

In addition to historical information, certain matters set forth herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to managements beliefs, projections and assumptions concerning future results and events. Forward-looking statements include descriptions of managements plans or objectives for future operations, products or services, and forecasts of the Companys revenues, earnings or other measures of economic performance. As well, forward-looking statements may relate to future outlook and anticipated events, such as the Company's plans and protocols with regard to managing potential impacts related to the COVID-19 virus, the Company's strategy to help keep its workforce and local communities safe, the Company's business continuity protocols and the potential impact on operations related to COVID-19, and the Company's ability to successfully advance its development and expansion projects and achieve its growth objectives. These forward-looking statements involve risks and uncertainties, based on the beliefs and assumptions of management and on the information available to management at the time that this presentation was prepared and can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words or phrases such as aim, can, "may," "could," "predict," "should," "will," "would," "believe," "anticipate," "estimate," "expect," hope, "intend," "plan," "potential," project, "will likely result," "continue," "seek," shall, possible, "projection," optimistic, and "outlook," and variations of these words and similar expressions or the negative version of those words or phrases.

Forward-looking statements involve substantial risks and uncertainties, many of which are difficult to predict and are generally beyond our control. Many factors could cause actual results to differ materially from those contemplated by these forward-looking statements. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements except as required by law. Any statements about future operating results, such as those concerning accretion and dilution to the Company's earnings or shareholders, are for illustrative purposes only, are not forecasts, and actual results may differ. Risks and uncertainties that could cause our financial performance to differ materially from our goals, plans, expectations and projections expressed in forward-looking statements include those set forth in our filings with the SEC, including under Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 as may be supplemented and/or amended by our Quarterly Reports on Form 10-Q as filed subsequent thereto.

Contacts

First Choice BancorpRobert M. Franko, 562.345.9241President & Chief Executive Officer

First Choice BancorpKhoi D. Dang, Esq., 562.263.8336Executive Vice President and General Counsel

First Choice Bancorp and Subsidiary

Financial Highlights and Selected Ratios (unaudited):

At or for the Three Months Ended At or for the Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2020 2020 2019 2020 2019 (dollars in thousands, except per share amounts)Total interest and $ 23,154 $ 21,844 $ 24,343 $ 66,742 $ 68,401 dividend incomeTotal interest 1,428 1,540 3,317 5,539 9,347 expenseNet interest income 21,726 20,304 21,026 61,203 59,054 Total noninterest 1,943 1,055 1,673 4,413 6,117 incomeTotal net interestincome and 23,669 21,359 22,699 65,616 65,171 noninterest incomeTotal noninterest 11,528 11,100 10,651 34,147 31,956 expensePre-taxpre-provision 12,141 10,259 12,048 31,469 33,215 income ^(1)Provision for loan 1,000 2,100 700 5,800 1,600 lossesIncome before taxes 11,141 8,159 11,348 25,669 31,615 Income taxes 3,260 2,429 3,277 7,512 9,725 NET INCOME $ 7,881 $ 5,730 $ 8,071 $ 18,157 $ 21,890 Total assets $ 2,256,342 $ 2,223,603 $ 1,655,595 $ 2,256,342 $ 1,655,595 Total loans held 1,884,930 1,831,619 1,316,620 1,884,930 1,316,620 for investmentNoninterest-bearing 736,118 789,770 666,271 736,118 666,271 depositsTotal deposits 1,559,912 1,604,997 1,339,538 1,559,912 1,339,538 Dividends declared $ 0.25 $ 0.25 $ 0.20 $ 0.75 $ 0.60 per common shareNet income per $ 0.67 $ 0.49 $ 0.68 $ 1.55 $ 1.85 share-dilutedReturn on average 1.39 % 1.09 % 1.98 % 1.19 % 1.86 %assetsReturn on average 11.57 % 8.59 % 12.45 % 9.05 % 11.60 %equityReturn on averagetangible common 16.31 % 12.18 % 18.03 % 12.83 % 16.95 %equity ^(1)Net interest margin 4.05 % 4.12 % 5.52 % 4.28 % 5.39 %Average loan yield 4.77 % 4.94 % 6.93 % 5.15 % 6.66 %Cost of deposits 0.25 % 0.31 % 0.89 % 0.38 % 0.84 %Cost of funds 0.29 % 0.34 % 0.98 % 0.42 % 0.95 %Efficiency ratio ^ 48.7 % 52.0 % 46.9 % 52.0 % 49.0 %(1)Noninterest-bearingdeposits to total 47.2 % 49.2 % 49.7 % 47.2 % 49.7 %depositsEquity to assets 12.08 % 12.01 % 15.62 % 12.08 % 15.62 %ratioTangible commonequity to tangible 8.90 % 8.77 % 11.37 % 8.90 % 11.37 %asset ratio ^(1)Book value per $ 23.28 $ 22.82 $ 22.20 $ 23.28 $ 22.20 shareTangible book value $ 16.56 $ 16.09 $ 15.38 $ 16.56 $ 15.38 per share ^(1)

(1)Non-GAAP measure. See GAAP to non-GAAP Reconciliation.

First Choice Bancorp and Subsidiary

Condensed Consolidated Balance Sheets (unaudited)

September 30, June 30, December 31, 2020 2020 2019 (audited) (dollars in thousands, except per share amounts)ASSETS Cash and due from $ 23,611 $ 20,954 $ 27,359 banksInterest-bearingdeposits at other 157,925 196,875 134,442 banksTotal cash and cash 181,536 217,829 161,801 equivalentsInvestment securities, 37,999 36,783 26,653 available-for-saleInvestment securities, 1,680 1,691 5,056 held-to-maturityEquity securities, at 2,792 2,782 2,694 fair valueRestricted stock 12,999 12,999 12,986 investments, at costLoans held for sale 36,474 20,326 7,659 Total loans held for 1,884,930 1,831,619 1,374,675 investmentAllowance for loan (18,734 ) (17,822 ) (13,522 ) lossesTotal loans held for 1,866,196 1,813,797 1,361,153 investment, netAccrued interest 11,500 13,809 5,451 receivablePremises and equipment 2,341 2,551 1,542 Servicing asset 2,368 2,516 3,202 Deferred taxes 6,095 5,829 6,163 Goodwill 73,425 73,425 73,425 Core deposit 5,149 5,342 5,728 intangibleForeclosed assets, net ? 602 ? Other assets 15,788 13,322 16,811 TOTAL ASSETS $ 2,256,342 $ 2,223,603 $ 1,690,324 LIABILITIES AND SHAREHOLDERS? EQUITYDeposits: Noninterest-bearing $ 736,118 $ 789,770 $ 626,569 demandMoney market, interest 649,613 620,719 514,366 checking and savingsTime deposits 174,181 194,508 172,758 Total deposits 1,559,912 1,604,997 1,313,693 Borrowings 150,000 150,000 90,000 Paycheck ProtectionProgram Liquidity 253,140 179,125 ? FacilitySenior secured debt 4,400 6,500 9,600 Accrued interestpayable and other 16,419 16,032 15,226 liabilitiesTotal liabilities 1,983,871 1,956,654 1,428,519 Total shareholders? 272,471 266,949 261,805 equityTOTAL LIABILITIES AND $ 2,256,342 $ 2,223,603 $ 1,690,324 SHAREHOLDERS? EQUITY Shares outstanding 11,705,878 11,697,766 11,635,531 Book value per share $ 23.28 $ 22.82 $ 22.50 Tangible book value $ 16.56 $ 16.09 $ 15.70 per share ^(1)

(1)Non-GAAP measure. See GAAP to non-GAAP Reconciliation.

First Choice Bancorp and Subsidiary

Condensed Consolidated Statements of Income (unaudited)

Three Months Ended Nine Months Ended September 30, September 30, June 30, 2020 September 30, 2020 2019 2020 2019 (dollars in thousands, except per share amounts)INTEREST and DIVIDEND INCOMEInterest and fees $ 22,671 $ 21,348 $ 23,206 $ 64,799 $ 65,466 on loansInterest oninvestment 180 225 208 623 659 securitiesInterest ondeposits at other 103 92 701 696 1,600 financialinstitutionsDividends on FHLB 200 179 228 624 676 and other stockTotal interest and 23,154 21,844 24,343 66,742 68,401 dividend incomeINTEREST EXPENSE Interest onsavings, interest 382 318 1,283 1,809 3,776 checking and moneymarket accountsInterest on time 588 856 1,605 2,439 4,073 depositsInterest on 207 197 253 780 967 borrowingsInterest on PPP 212 112 ? 324 ? Liquidity FacilityInterest on senior 39 57 176 187 531 secured notesTotal interest 1,428 1,540 3,317 5,539 9,347 expenseNet interest 21,726 20,304 21,026 61,203 59,054 incomeProvision for loan 1,000 2,100 700 5,800 1,600 lossesNet interestincome after 20,726 18,204 20,326 55,403 57,454 provision for loanlossesNONINTEREST INCOME Gain on sale of 990 ? 528 1,367 2,727 loansService chargesand fees on 495 447 475 1,497 1,579 deposit accountsNet servicing fees 228 (9 ) 242 443 763 (expense)Other income 230 617 428 1,106 1,048 Total noninterest 1,943 1,055 1,673 4,413 6,117 incomeNONINTEREST EXPENSESalaries and 7,126 6,386 6,472 20,742 19,552 employee benefitsOccupancy and 1,137 1,108 1,097 3,308 3,513 equipmentData processing 955 874 718 2,636 1,961 Professional fees 492 450 392 1,413 1,237 Office, postageand 274 289 253 821 780 telecommunicationsDeposit insuranceand regulatory 386 198 30 645 345 assessmentsLoan related 59 226 244 560 529 Customer service 81 328 437 781 1,187 relatedAmortization ofcore deposit 193 193 197 579 590 intangibleOther expenses 825 1,048 811 2,662 2,262 Total noninterest 11,528 11,100 10,651 34,147 31,956 expenseIncome before 11,141 8,159 11,348 25,669 31,615 taxesIncome taxes 3,260 2,429 3,277 7,512 9,725 Net income $ 7,881 $ 5,730 $ 8,071 $ 18,157 $ 21,890 Net income per $ 0.67 $ 0.49 $ 0.68 $ 1.55 $ 1.85 share - dilutedWeighted average 11,612,270 11,606,280 11,659,146 11,616,839 11,714,020 shares - diluted

First Choice Bancorp and Subsidiary

Average Balance Sheets and Yield Analysis

Three Months Ended September 30, 2020 June 30, 2020 September 30, 2019 Average Interest Yield / Average Interest Yield / Average Interest Yield / Balance Income / Cost Balance Income / Cost Balance Income / Cost Expense Expense ExpenseInterest-earning assets: (dollars in thousands)Loans (1) $ 1,892,450 $ 22,671 4.77 % $ 1,738,172 $ 21,348 4.94 % $ 1,328,088 $ 23,206 6.93 %Investment securities 43,154 180 1.66 % 42,553 225 2.13 % 35,651 208 2.31 %Deposits at other financial 184,606 103 0.22 % 186,741 92 0.20 % 134,557 701 2.07 %institutionsRestricted stock investments 14,534 200 5.47 % 14,534 179 4.95 % 13,988 228 6.47 %and other bank stocksTotal interest-earning assets 2,134,744 23,154 4.31 % 1,982,000 21,844 4.43 % 1,512,284 24,343 6.39 % Noninterest-earning assets 119,717 127,208 108,520 Total assets $ 2,254,461 $ 2,109,208 $ 1,620,804 Interest-bearing liabilities: Interest checking $ 279,945 $ 111 0.16 % $ 251,398 $ 101 0.16 % $ 116,107 $ 337 1.15 %Money market accounts 338,970 260 0.31 % 298,040 207 0.28 % 267,493 890 1.32 %Savings accounts 31,639 11 0.14 % 30,104 10 0.13 % 29,070 56 0.76 %Time deposits 81,837 201 0.98 % 91,051 292 1.29 % 147,568 676 1.82 %Brokered time deposits 107,347 387 1.43 % 90,349 564 2.51 % 138,682 929 2.66 %Total interest-bearing 839,738 970 0.46 % 760,942 1,174 0.62 % 698,920 2,888 1.64 %depositsBorrowings 152,762 207 0.54 % 145,440 197 0.54 % 48,263 253 2.08 %Paycheck Protection Program 240,602 212 0.35 % 127,962 112 0.35 % ? ? ? %Liquidity FacilitySenior secured notes 4,620 39 3.36 % 6,754 57 3.39 % 12,267 176 5.69 %Total interest-bearing 1,237,722 1,428 0.46 % 1,041,098 1,540 0.59 % 759,450 3,317 1.73 %liabilities Noninterest-bearing liabilities:Demand deposits 730,306 783,258 590,212 Other liabilities 15,530 16,684 13,984 Shareholders? equity 270,903 268,168 257,158 Total liabilities and $ 2,254,461 $ 2,109,208 $ 1,620,804 shareholders' equity Net interest spread $ 21,726 3.85 % $ 20,304 3.84 % $ 21,026 4.66 %Net interest margin 4.05 % 4.12 % 5.52 % Total deposits $ 1,570,044 $ 970 0.25 % $ 1,544,200 $ 1,174 0.31 % $ 1,289,132 $ 2,888 0.89 %Total funding sources $ 1,968,028 $ 1,428 0.29 % $ 1,824,356 $ 1,540 0.34 % $ 1,349,662 $ 3,317 0.98 %

(1) Average loans include net discounts and net deferred loan fees and costs. Interest income on loans includes $1.7million, $1.3million and $254 thousand related to the accretion of net deferred loan fees for the quarters ended September 30, 2020, June30, 2020 and September 30, 2019. In addition, interest income includes $835 thousand, $421 thousand and $2.2million of discount accretion on loans acquired in a business combination, including the interest recognized on the payoff of PCI loans, for the quarters ended September 30, 2020, June30, 2020 and September 30, 2019.

First Choice Bancorp and Subsidiary

Average Balance Sheets and Yield Analysis (continued)

Nine Months Ended September 30, 2020 2019 Average Interest Yield / Average Interest Yield / Balance Income / Cost Balance Income / Cost Expense ExpenseInterest-earning (dollars in thousands)assets:Loans (1) $ 1,679,206 $ 64,799 5.15 % $ 1,314,513 $ 65,466 6.66 %Investment 40,645 623 2.05 % 36,355 659 2.42 %securitiesDeposits at otherfinancial 176,393 696 0.53 % 99,711 1,570 2.11 %institutionsFederal funds sold/ ? ? ? % 1,662 30 2.41 %resale agreementsFHLB and other bank 14,531 624 5.74 % 13,937 676 6.48 %stockTotalinterest-earning 1,910,775 66,742 4.67 % 1,466,178 68,401 6.24 %assets Noninterest-earning 120,400 108,782 assets $ 2,031,175 $ 1,574,960 Interest-bearing liabilities:Interest checking $ 229,436 $ 473 0.28 % $ 115,358 $ 944 1.09 %Money market 318,567 1,267 0.53 % 270,163 2,658 1.32 %accountsSavings accounts 30,008 69 0.31 % 30,731 174 0.76 %Time deposits 96,764 983 1.36 % 156,095 2,080 1.78 %Brokered time 96,885 1,456 2.01 % 109,598 1,993 2.43 %depositsTotalinterest-bearing 771,660 4,248 0.74 % 681,945 7,849 1.54 %depositsBorrowings 130,344 780 0.80 % 53,987 967 2.39 %Paycheck ProtectionProgram Liquidity 123,138 324 0.35 % ? ? ? %FacilitySenior secured 6,458 187 3.87 % 12,190 531 5.82 %notesTotalinterest-bearing 1,031,600 5,539 0.72 % 748,122 9,347 1.67 %liabilities Noninterest-bearing liabilities:Demand deposits 715,180 562,195 Other liabilities 16,405 12,281 Shareholders? 267,990 252,362 equity Total liabilitiesand shareholders' $ 2,031,175 $ 1,574,960 equity Net interest spread $ 61,203 3.95 % $ 59,054 4.57 %Net interest margin 4.28 % 5.39 % Total deposits $ 1,486,840 $ 4,248 0.38 % $ 1,244,140 $ 7,849 0.84 %Total funding $ 1,746,780 $ 5,539 0.42 % $ 1,310,317 $ 9,347 0.95 %sources

(1) Average loans include net discounts and net deferred loan fees and costs. Interest income on loans includes $3.3 million and $721 thousand related to the accretion of net deferred loan fees for the nine months ended September 30, 2020 and September 30, 2019. In addition, interest income includes $1.9 million and $3.8 million of discount accretion on loans acquired in a business combination, including the interest recognized on the payoff of PCI loans, for the nine months ended September 30, 2020 and September 30, 2019.

First Choice Bancorp and Subsidiary

Loan Composition

September 30, 2020 June 30, 2020 December 31, 2019 Amount Percentage Amount Percentage Amount Percentage of Total of Total of Total (dollars in thousands)Constructionand land $ 215,109 11.3 % $ 218,226 11.8 % $ 249,504 18.1 %developmentReal estate: Residential 30,067 1.6 % 39,145 2.1 % 43,736 3.2 %Commercialreal estate 159,603 8.4 % 162,508 8.8 % 171,595 12.5 %- owneroccupiedCommercialreal estate 528,201 27.9 % 502,693 27.3 % 423,823 30.8 %- non-owneroccupiedCommercialand 361,170 19.0 % 335,411 18.2 % 309,011 22.5 %industrialSBA loans ^ 602,407 31.8 % 586,820 31.8 % 177,633 12.9 %(1)Consumer 8 ? % 34 ? % 430 ? %Total loansheld forinvestment, $ 1,896,565 100.0 % $ 1,844,837 100.0 % $ 1,375,732 100.0 %net ofdiscountsNet deferredloan fees ^ (11,635 ) (13,218 ) (1,057 ) (1)Total loansheld for $ 1,884,930 $ 1,831,619 $ 1,374,675 investmentAllowancefor loan (18,734 ) (17,822 ) (13,522 ) lossesTotal loansheld for $ 1,866,196 $ 1,813,797 $ 1,361,153 investment,net

(1)Includes PPP loans with total outstanding principal of $400.1 million and $400.7 million and net unearned fees of $9.9 million and $11.5 million at September 30, 2020 and June30, 2020.

Total loans held for investment

September 30, 2020 June 30, December 31, 2019 2020 (dollars in thousands)Gross loansheld for $ 1,904,019 $ 1,852,768 $ 1,385,142 investment ^(1)Unamortizednet discounts (7,454 ) (7,931 ) (9,410 ) ^(2)Netunamortizeddeferred (11,635 ) (13,218 ) (1,057 ) originationfees ^(1)Total loansheld for $ 1,884,930 $ 1,831,619 $ 1,374,675 investment

-- Includes PPP loans with total outstanding principal of $400.1 million and $400.7 million and net unearned fees of $9.9 million and $11.5 million at September 30, 2020 and June30, 2020. -- Unamortized net discounts include discounts related to the retained portion of SBA loans and net discounts on Non-PCI acquired loans. At September 30, 2020, net discounts related to loans acquired in the PCB acquisition totaled $4.3 million that is expected to be accreted into interest income over a weighted average remaining life of 4.1 years. At June30, 2020 and December 31, 2019, net discounts related to loans acquired in the PCB acquisition totaled $4.8 million and $6.0 million.

Allowance for Loan losses

Three Months Ended Nine Months Ended September 30, September 30, June 30, September 30, 2020 2019 2020 2020 2019 (dollars in thousands)Balance,beginning $ 17,822 $ 16,218 $ 12,053 $ 13,522 $ 11,056 of periodProvisionfor loan 1,000 2,100 700 5,800 1,600 lossesCharge-offs (194 ) (550 ) (437 ) (772 ) (561 ) Recoveries 106 54 24 184 245 Net (88 ) (496 ) (413 ) (588 ) (316 ) charge-offsBalance,end of $ 18,734 $ 17,822 $ 12,340 $ 18,734 $ 12,340 period Annualizednetcharge-offs (0.02 ) % (0.11 ) % (0.12 ) % (0.05 ) % (0.03 ) %to averageloans

Credit Quality (1)

September June 30, December 30, 2020 2020 31, 2019 (dollars in thousands)Accruing loans past due 90 days or $ ? $ 267 $ ? moreNon-accrual loans 12,847 7,999 11,107 Troubled debt restructurings on 144 150 158 non-accrualTotal nonperforming loans 12,991 8,416 11,265 Foreclosed assets ? 602 ? Total nonperforming assets $ 12,991 $ 9,018 $ 11,265 Troubled debt restructurings - on $ 320 $ 319 $ 321 accrual Nonperforming loans as a percentage of 0.69 % 0.46 % 0.82 %total loans held for investmentNonperforming assets as a percentage 0.58 % 0.41 % 0.67 %of total assetsAllowance for loan losses as apercentage of total loans held for 0.99 % 0.97 % 0.98 %investmentAllowance for loan losses as apercentage of total loans held for 1.25 % 1.24 % 0.98 %investment excluding PPP loansAllowance for loan losses as a 144.21 % 211.76 % 120.04 %percentage of nonperforming loansAllowance for loan losses as a 144.21 % 197.63 % 120.04 %percentage of nonperforming assetsAccruing loans held for investment $ 1,233 $ 353 $ 1,767 past due 30 - 89 days

(1) Excludes purchased credit impaired loans with a net carrying value of $792 thousand, $1.0 million and $1.1 million at September 30, 2020, June30, 2020 and December31, 2019.

GAAP to Non-GAAP Reconciliation

The following tables present a reconciliation of non-GAAP financial measures to GAAP measures for: (1) efficiency ratio, (2) pre-tax pre-provision income, (3) average tangible common equity, (4) return on average tangible common equity, (5) tangible common equity, (6) tangible assets, (7) tangible common equity to tangible asset ratio, and (8) tangible book value per share. We believe the presentation of certain non-GAAP financial measures provides useful information to assess our consolidated financial condition and consolidated results of operations and to assist investors in evaluating our financial results relative to our peers. These non-GAAP financial measures complement our GAAP reporting and are presented below to provide investors and others with information that we use to manage the business each period. Because not all companies use identical calculations, the presentation of these non-GAAP financial measures may not be comparable to other similarly titled measures used by other companies. These non-GAAP measures should be taken together with the corresponding GAAP measures and should not be considered a substitute of the GAAP measures.

Three Months Ended Nine Months Ended September 30, September 30, June 30, September 30, 2020 2019 2020 2020 2019Efficiency (dollars in thousands)RatioNoninterestexpense $ 11,528 $ 11,100 $ 10,651 $ 34,147 $ 31,956 (numerator) Net interest $ 21,726 $ 20,304 $ 21,026 $ 61,203 $ 59,054 incomePlus:Noninterest 1,943 1,055 1,673 4,413 6,117 incomeTotal netinterestincome and $ 23,669 $ 21,359 $ 22,699 $ 65,616 $ 65,171 noninterestincome(denominator)Efficiency 48.7 % 52.0 % 46.9 % 52.0 % 49.0 %ratio Pre-taxpre-provision incomeNet interest $ 21,726 $ 20,304 $ 21,026 $ 61,203 $ 59,054 incomeNoninterest 1,943 1,055 1,673 4,413 6,117 incomeTotal netinterestincome and 23,669 21,359 22,699 65,616 65,171 noninterestincomeLess:Noninterest 11,528 11,100 10,651 34,147 31,956 expensePre-taxpre-provision $ 12,141 $ 10,259 $ 12,048 $ 31,469 $ 33,215 income Return onAverageAssets, Equity,TangibleEquityNet income $ 7,881 $ 5,730 $ 8,071 $ 18,157 $ 21,890 Average $ 2,254,461 $ 2,109,208 $ 1,620,804 $ 2,031,175 $ 1,574,960 assetsAverageshareholders? 270,903 268,168 257,158 267,990 252,362 equityLess: Averageintangible 78,696 78,901 79,535 78,888 79,730 assetsAveragetangible $ 192,207 $ 189,267 $ 177,623 $ 189,102 $ 172,632 common equity Return onaverage 1.39 % 1.09 % 1.98 % 1.19 % 1.86 %assetsReturn onaverage 11.57 % 8.59 % 12.45 % 9.05 % 11.60 %equityReturn onaverage 16.31 % 12.18 % 18.03 % 12.83 % 16.95 %tangiblecommon equity

As of September 30, June 30, December 31, 2020 2020 2019Tangible Common Equity Ratio/ (dollars in thousands, except per share amounts)Tangible Book Value Per ShareShareholders? equity $ 272,471 $ 266,949 $ 261,805 Less: Intangible assets 78,574 78,767 79,153 Tangible common equity $ 193,897 $ 188,182 $ 182,652 Total assets $ 2,256,342 $ 2,223,603 $ 1,690,324 Less: Intangible assets 78,574 78,767 79,153 Tangible assets $ 2,177,768 $ 2,144,836 $ 1,611,171 Equity to assets ratio 12.08 % 12.01 % 15.49 %Tangible common equity to 8.90 % 8.77 % 11.34 %tangible asset ratio Shares outstanding 11,705,878 11,697,766 11,635,531 Book value per share $ 23.28 $ 22.82 $ 22.50 Tangible book value per share $ 16.56 $ 16.09 $ 15.70