GlobeNewswire Inc | Jul 21, 2020 09:00AM EDT

July 21, 2020

Current Quarter Highlights

? Net income of $5.7 million, up 26.0% over Q1?20 ? Diluted earnings per common share of $0.49, up 25.6% over Q1?20 ? Net interest margin of 4.12% and cost of funds of 0.34% ? Return on average assets and average equity of 1.09% and 8.59% ? Provision for loan losses of $2.1 million including approximately $1.4 million related to the impact of COVID-19 ? Provision for unfunded loan commitments of $300 thousand Total loans held for investment increased $393.6 million, including $389.2 ? million, net of unearned fees, of Paycheck Protection Program (?PPP?) loans, up 27.4% over Q1?20 ? Noninterest-bearing demand deposits grew $162.0 million, up 25.8% over Q1?20 and represent 49.2% of total deposits ? Community bank leverage ratio (preliminary) of 10.31% at June 30, 2020 ? Quarterly cash dividend of $0.25 per share

COVID-19 Updates

Loans granted a 90-day principal and/or interest deferment totaled $626 million at June 30, 2020. As of July 16, 2020, four loans totaling $11 ? million have been granted an additional deferment, and 63% of the total loan balance have resumed scheduled payments or paid off, with the remainder expected to resume payments as scheduled. COVID-19 related loan deferrals continue to accrue interest and are not ? reported as TDRs under the Coronavirus Aid, Relief and Economic Security Act (?CARES Act?) Total number and outstanding principal before unearned fees of PPP loans ? were 1,886 and $400.7 million with an average loan size of $212 thousand, weighted average fee of 3.16% and loan yield of 2.64% ? No PPP loans were forgiven as of June 30, 2020 pending the issuance of regulatory guidelines ? New deposit accounts related to PPP loans totaled $82.9 million at June 30, 2020 ? Approved as an ?Eligible Lender? to participate in the Main Street Lending Program

Cerritos, CA, July 21, 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 $5.7 million for the second quarter of 2020, or $0.49 per diluted share, compared to net income of $4.5 million, or $0.39 per diluted share, for the first quarter of 2020. Pre-tax pre-provision income was $10.3 million for the second quarter of 2020, an increase of $1.2 million, compared to the pre-tax pre-provision income of $9.1 million for the first quarter of 2020. Financial results for the second quarter of 2020 include a provision for loan losses and unfunded loan commitments of $2.4 million, or $0.15 per diluted share, compared to $2.7 million, or $0.16 per diluted share in the first quarter of 2020.

During the COVID-19 crisis, our Board and team members have worked tirelessly to be a source of strength to our customers, said Peter Hui, Chairman of the Board. We are fortunate to have a strong base of clients with the capital and liquidity to be able to support their businesses as they weather this crisis. Through the efforts of our team, we have provided our clients with additional liquidity through the Paycheck Protection Program and we are now an approved lenders in the Main Street Lending Program. The Company has maintained strong earnings for our shareholders, which has allowed us to continue our quarterly dividend of $0.25 per share.

We had a highly productive quarter that resulted in strong balance sheet growth and the successful resolution of some lingering problem credits that reduced our non-performing assets, said Robert M. Franko, President and CEO. In terms of asset quality, we are encouraged by the trends we are seeing. Our Small Business Administration (SBA) borrowers are receiving tremendous relief thanks to the SBAs 6-month deferred payment program. In addition, we provided COVID-19-related deferments for about a third of the loans in our portfolio, and a number of those clients have returned to regular payment programs. Through our PPP efforts, we added a significant number of new client relationships that contributed to the strong inflows we saw in core deposits during the quarter. We have a healthy pipeline of new business development opportunities that we will continue to service through the PPP program and our traditional lending activities. We are optimistic about being an approved lender in the Main Street Lending Program and hope to provide much needed liquidity to those that need it. While the ongoing pandemic continues to create uncertainty, we believe we are well positioned to continue delivering solid financial results in the second half of the year. On a final note, I am particularly proud of all of our team members, many working from home, who have continued to carry out our commitment to being First in Speed, Service and Solutions.

STATEMENT OF INCOME

Net Interest Income

Net interest income for the second quarter of 2020 totaled $20.3 million, an increase of $1.1 million from the first quarter of 2020 due to slightly higher interest income of $100 thousand, coupled with lower interest expense of $1.0 million. The increase in net interest income was due primarily to interest income and fees recognized for PPP loans and reductions in the costs of interest-bearing deposits and borrowings. The decrease in loan yields and cost of funds for the second quarter of 2020 reflected the full quarter impact of the 150 basis point reduction in the target Federal Funds rate at the end of March 2020. Average loans increased by $333.5 million, of which $287.3 million was from PPP loans, net of earned fees, funded in the second quarter of 2020. PPP loans carry a fixed rate of 1.0% with a two-year contractual maturity, and the weighted average rate for the processing fee is 3.16%. These loans contributed $1.9 million to interest income for the second quarter of 2020. The decrease in interest expense for the second quarter of 2020 was due primarily to lower market interest rates and the Companys proactive strategy to lower the cost of interest-bearing customer deposits, replace high rate brokered deposits and take advantage of the lower cost of borrowings and wholesale funding facilities. Interest expense on interest-bearing deposits decreased $930 thousand, coupled with a decrease of $101 thousand on total borrowings. Interest expense on the PPP Liquidity Facility (PPPLF) was $112 thousand for the second quarter of 2020.

Net Interest Margin

Net interest margin for the second quarter of 2020 decreased 66 basis points to 4.12% from 4.78% for the first quarter of 2020. The decrease in the net interest margin was due primarily to a 101 basis point decrease in loan yields (including fees and discounts), partially offset by a change in the interest-earning asset mix, and a 38 basis point decrease in funding costs. 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 4.94% for the second quarter of 2020, compared to 5.95% for the first quarter of 2020. The weighted average loan yield for PPP loans was 2.64%, which lowered the total loan yield by 46 basis points for the second quarter of 2020.

The cost of funds decreased to 0.34% for the second quarter of 2020, compared to 0.72% for the first quarter of 2020, due primarily to lower market interest rates and a change in the funding mix with a higher percentage of average noninterest-bearing demand deposits, and a higher percentage of average total borrowings. Average borrowings increased $53.3 million to $145.4 million, coupled with an increase of $128.0 million from the PPPLF with an average rate of 0.35% to support the PPP loans funded. The average cost of borrowings decreased 110 basis points to 0.54% for the second quarter of 2020, compared to 1.64% for the first quarter of 2020. Average senior secured notes decreased $1.3 million to $6.8 million and the average cost of such borrowings decreased 117 basis points to 3.39%. Average noninterest-bearing demand deposits increased $151.4 million to $783.3 million and represented 50.7% of total average deposits for the second quarter of 2020, compared to $631.8 million, or 47.0% of total average deposits, for the first quarter of 2020. The increase in average noninterest-bearing demand deposits was primarily due to new accounts opened for PPP loans with an average balance of $116 million for the second quarter of 2020. The total cost of deposits decreased 32 basis points to 0.31% for the second quarter of 2020, compared to 0.63% for the first quarter of 2020. The discount accretion from loans acquired in a business combination of $421 thousand contributed 9 basis points to the net interest margin in the second quarter of 2020 compared to $624 thousand and 16 basis points in the first quarter of 2020.

Provision for Loan Losses

The provision for loan losses for the second quarter of 2020 decreased $600 thousand to $2.1 million, compared to $2.7 million for the first quarter of 2020. Approximately $1.4 million of the second quarter provision was driven by an increase in qualitative factors relating to the COVID-19 pandemic and macro-economic conditions including a reserve of $138 thousand for accrued interest receivable related to loans on deferment. While the economy gradually reopened during the second quarter of 2020, the Governor of California has since implemented further restrictions and the timing of an economic recovery remains uncertain. The assumptions underlying the COVID-19 related qualitative factors included (a) uncertain and volatile macro-economic conditions caused by the pandemic; (b) the high unemployment rate; and (c) the loan deferment program. No provision for loan losses on PPP loans was recognized in the second quarter of 2020 as the SBA guarantees 100% of loans funded under the program.

Noninterest Income

Noninterest income for the second quarter of 2020 was $1.1 million, a decrease of $360 thousand from $1.4 million for the first quarter of 2020 due primarily to lower gains on loan sales of $377 thousand and lower net servicing fees of $233 thousand, partially offset by higher other income of $358 thousand. There were no loans sold during the second quarter of 2020, compared to $3.4 million in loans sold and a gain on sale of $377 thousand in the first quarter of 2020. The $233 thousand decrease in net servicing fees was due primarily to higher amortization from early loan pay-offs which totaled $277 thousand for the second quarter of 2020 compared to $69 thousand for the first quarter of 2020. Gains, included in other income, on transfer of loan collateral to foreclosed assets of $153 thousand were recognized for the second quarter of 2020. There was no similar income in the first quarter of 2020. Other income for the second quarter of 2020 also included a Bank Enterprise Award of $233 thousand from the U.S.Treasurys Community Development Financial Institutions Fund to recognize the Bank for providing small business loans or commercial real estate development loans to businesses located in distressed communities. There was no similar income in the first quarter of 2020.

Noninterest Expense

Noninterest expense decreased $419 thousand to $11.1 million for the second quarter of 2020 from $11.5 million for the first quarter of 2020. This decrease was due primarily to lower salaries and employee benefit expenses, lower loan related expenses and lower customer service related expenses, offset partially by higher data processing, FDIC assessment fees and other expenses.

The $844 thousand decrease in salaries and employee benefits was due to lower incentive accruals resulting from a decrease in organic loan production in the second quarter of 2020 and lower payroll taxes and employee benefits resulting from a seasonally higher first quarter. The $49 thousand decrease in loan related expenses was due primarily to a recovery of expenses in the second quarter of 2020. The $44 thousand decrease in customer service related expenses was due primarily to lower average demand deposits for certain deposit accounts during the second quarter of 2020.

The $137 thousand increase in FDIC assessment fees was due to Small Bank Assessment Credits received in the first quarter of 2020 for which there are no further credits. The increase in other expenses related primarily to a $300 thousand increase in the provision for unfunded loan commitments resulting from an increase in unfunded loan commitments and historical loss rates.

The efficiency ratio remained favorable at 52.0% in the second quarter of 2020, compared to 56.0% in the first quarter of 2020. The lower efficiency ratio in the second quarter of 2020 was driven by higher revenue including the benefits of the PPP loan volume.

Income Taxes

Income tax expense was $2.4 million for the second quarter of 2020 compared to $1.8 million for the first quarter of 2020. The effective tax rate was 29.8% for the second quarter of 2020 and 28.6% for the first 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 $393.6 million in the second quarter of 2020, or 27.4%, to $1.83 billion at June 30, 2020 primarily due to the Companys participation in the PPP loan program and an increase in commercial real estate loans, partially offset by a decrease in commercial and industrial loans, residential loans and construction and land loans.

PPP loans, net of unearned fees of $11.5 million, totaled $389.2 million at June 30, 2020. The unearned fees are being accreted based on the two-year contractual maturity. The Company anticipates that the SBA may forgive a significant number of PPP loans in the third and fourth quarters of 2020, at which point the recognition of fee income will be accelerated. New loan commitments from organic growth, excluding PPP loans, totaled $94.3 million for the second quarter of 2020, compared to $188.5 million for the first quarter of 2020. The second quarter new loan commitments included $50.8 million in construction and commercial real estate loans, $23.5 million in commercial and industrial loans, $12.1 million in SBA loans held for investment and $7.9 million of SBA loans held for sale. Total unfunded loan commitments increased $11.1 million to $393.4 million at June 30, 2020 from $382.3 million at March 31, 2020 due to lower utilization and higher repayment on existing lines of credit. During the second quarter of 2020, borrower repayments on existing lines of credit totaled $44.8 million, partially offset by drawdowns and new commitments.

Loan Deferment

At June 30, 2020, the Company had 520 loans totaling $626 million with a 90-day principal and/or interest deferral for COVID-related reasons. No deferred payment loans which met the requirement under Section 4013 of the CARES Act were reported as past due loans or troubled debt restructurings (TDRs). The Company currently expects that the majority of these loans will resume payments in the third quarter of 2020. Total accrued interest receivable related to these loans on deferment was $10 million with an aforementioned reserve of $138 thousand at June 30, 2020. Borrowers are contractually required to resume making full payments after the deferral period ends. As of July 16, 2020, 232 loans with a net carrying value of $397 million at June 30, 2020, or 63% of total loan balance, resumed making payments or paid off, and only four loans totaling $11 million were granted an additional 90-day deferment. The remainder is expected to resume payments as scheduled.

Deposits

Total deposits increased $254.0 million from the prior quarter to $1.60 billion at June 30, 2020 due to new noninterest-bearing deposit accounts opened for PPP loans, and strong core deposit growth.

Noninterest-bearing deposits totaled $789.8 million, an increase of $162.0 million in the second quarter of 2020. Approximately $83 million of the increase was due to new deposit accounts for PPP loans at June 30, 2020. The remaining increase was due to core deposit growth. Interest-bearing nonmaturity deposits increased $95.3 million primarily due to an increase in core deposits from the FDIC Insurance Program through Demand Deposit Marketplace (DDM) and other financial institutions. Time deposits had a slight decrease of $3.4 million due primarily to a decrease in customer time deposits, offset by higher brokered time deposits. At June 30, 2020, brokered time deposits totaled $115.5 million, of which $78.6 million are callable in six months. Noninterest-bearing deposits were $789.8 million and represented 49.2% of total deposits at June 30, 2020, compared to $627.8 million and 46.5% of total deposits at March 31, 2020.

Borrowing

Being an SBA-qualified PPP lender, the Company participated in the PPPLF established by the Federal Reserve. At June 30, 2020, the Company borrowed $179.1 million under the PPPLF with a fixed-rate of 0.35% and pledged PPP loans as collateral to secure the borrowings. The Company also participated in the FHLB San Franciscos new Recovery Advance loan program for $10 million at zero percent interest at June 30, 2020 with maturity dates in November 2020 and May 2021.

Credit Quality

Nonperforming loans decreased to $8.4 million at June 30, 2020, compared to $9.1 million at March 31, 2020, and represented 0.46% and 0.64% of total loans held for investment, respectively. The decrease in nonperforming loans was due to three SBA loans that were charged-off or paid off, partially offset by an increase of one loan past due 90 days or more that was still accruing interest at June 30, 2020. There were no loans over 90 days past due that were still accruing interest at March 31, 2020. Net charge-offs for the second quarter of 2020 were $496 thousand, or 0.11% of average loans on an annualized basis, compared to $4 thousand or 0.001% of average loans on an annualized basis for the first quarter of 2020. Foreclosed assets increased to $602 thousand at June 30, 2020. There were no foreclosed assets in the first quarter of 2020. Nonperforming assets totaled $9.0 million at June 30, 2020, compared to $9.1 million at March 31, 2020, and represented 0.41% and 0.51% of total assets, respectively.

Loan delinquencies (30-89 days past due) totaled $353 thousand at June 30, 2020, compared to $2.3 million at March 31, 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, including $138 thousand for accrued interest receivable related to loans on deferment, increased 9.9% to $17.8 million and represented 0.97% of total loans held for investment and 211.8% of nonperforming loans at June 30, 2020, compared with 1.13% and 177.5% at March 31, 2020, respectively. The allowance for loan losses as a percentage of total loan held for investments without PPP loans was 1.24% at June 30, 2020. At June 30, 2020, the net carrying value of acquired loans totaled $187.3 million and included a remaining net discount of $4.8 million. The discount is available to absorb losses on the acquired loans and represented 2.6% of the net carrying value of acquired loans and 0.26% 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 will be 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 the leverage ratio calculation. However, such assets are included in total consolidated assets for purposes of determining the eligibility to elect the CBLR framework.

At June 30, 2020, the Banks preliminary CBLR ratio was 10.31% which exceeded all regulatory capital requirements under the CBLR framework and the Bank was considered to be well-capitalized.

Stock Repurchase Program

The Company suspended the stock repurchase program on March 17, 2020. During the second quarter of 2020, there were no repurchases of common stock, compared to 38,411 shares of common stock repurchased at an average price of $22.34 and a total cost of $858 thousand in the first quarter of 2020. The remaining number of shares authorized to be repurchased under this program was 695,489 shares at June 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 Banks 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 June 30, 2020, First Choice Bancorp had total consolidated assets of $2.22 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 with a specialization in providing financial solutions for the hospitality industry. 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 June 30, 2020, more than 70% of the Companys total workforce identified as ethnic minorities and more than 65% 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 Companys 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 non-GAAP financial measures to 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 Companys plans and protocols with regard to managing potential impacts related to the COVID-19 virus, the Companys strategy to help keep its workforce and local communities safe, the Companys business continuity protocols and the potential impact on operations related to COVID-19, and the Companys 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 Companys 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 supplemental and/or amended by our Quarterly Reports on Form 10-Q as filed subsequent thereto.

ContactsFirst 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 Six Months Ended June 30, March 31, June 30, June 30, June 30, 2020 2020 2019 2020 2019 (dollars in thousands, except per share amounts) Total interest and $ 21,844 $ 21,744 $ 22,219 $ 43,588 $ 44,058 dividend incomeTotal interest 1,540 2,571 3,383 4,111 6,030 expenseNet interest income 20,304 19,173 18,836 39,477 38,028 Total noninterest 1,055 1,415 2,322 2,470 4,444 incomeTotal net interestincome and 21,359 20,588 21,158 41,947 42,472 noninterest incomeTotal noninterest 11,100 11,519 10,605 22,619 21,305 expensePre-taxpre-provision 10,259 9,069 10,553 19,328 21,167 income ^(1)Provision for loan 2,100 2,700 550 4,800 900 losses ^(2)Income before taxes 8,159 6,369 10,003 14,528 20,267 Income taxes 2,429 1,823 3,192 4,252 6,448 NET INCOME $ 5,730 $ 4,546 $ 6,811 $ 10,276 $ 13,819 Total assets $ 2,223,603 $ 1,775,662 $ 1,730,433 $ 2,223,603 $ 1,730,433 Total loans held 1,831,619 1,438,055 1,336,015 1,831,619 1,336,015 for investmentNoninterest-bearing 789,770 627,793 547,434 789,770 547,434 depositsTotal deposits 1,604,997 1,351,040 1,255,878 1,604,997 1,255,878 Dividends declared $ 0.25 $ 0.25 $ 0.20 $ 0.50 $ 0.40 per common shareNet income per $ 0.49 $ 0.39 $ 0.58 $ 0.88 $ 1.17 share-dilutedReturn on average 1.09 % 1.06 % 1.73 % 1.08 % 1.80 %assetsReturn on average 8.59 % 6.90 % 10.86 % 7.75 % 11.15 %equityReturn on averagetangible common 12.18 % 9.84 % 15.89 % 11.02 % 16.38 %equity ^(1)Net interest margin 4.12 % 4.78 % 5.14 % 4.42 % 5.32 %Average loan yield 4.94 % 5.95 % 6.42 % 5.39 % 6.52 %Cost of deposits 0.31 % 0.63 % 0.89 % 0.46 % 0.82 %Cost of funds 0.34 % 0.72 % 1.03 % 0.51 % 0.94 %Efficiency ratio ^ 52.0 % 56.0 % 50.1 % 53.9 % 50.2 %(1)Noninterest-bearingdeposits to total 49.2 % 46.5 % 43.6 % 49.2 % 43.6 %depositsEquity to assets 12.01 % 14.83 % 14.69 % 12.01 % 14.69 %ratioTangible commonequity to tangible 8.77 % 10.87 % 10.57 % 8.77 % 10.57 %asset ratio ^(1)Book value per $ 22.82 $ 22.58 $ 21.65 $ 22.82 $ 21.65 shareTangible book value $ 16.09 $ 15.81 $ 14.87 $ 16.09 $ 14.87 per share ^(1)

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

Includes $138 thousand of reserves for accrued interest receivable related(2) to loans on deferment for the three months and six months ended June 30, 2020.

First Choice Bancorp and Subsidiary

Condensed Consolidated Balance Sheets (unaudited)

June 30, March 31, December 31, 2020 2020 2019 (dollars in thousands, except per share amounts)ASSETS Cash and due from banks $ 20,954 $ 12,915 $ 27,359 Interest-bearing deposits at 196,875 160,662 134,442 other banksTotal cash and cash 217,829 173,577 161,801 equivalentsInvestment securities, 36,783 38,924 26,653 available-for-saleInvestment securities, 1,691 1,702 5,056 held-to-maturityEquity securities, at fair 2,782 2,753 2,694 valueRestricted stock 12,999 12,999 12,986 investments, at costLoans held for sale 20,326 13,594 7,659 Total loans held for 1,831,619 1,438,055 1,374,675 investmentAllowance for loan losses ^ (17,822 ) (16,218 ) (13,522 )(1)Total loans held for 1,813,797 1,421,837 1,361,153 investment, netAccrued interest receivable 13,809 5,670 5,451 Premises and equipment 2,551 2,109 1,542 Servicing asset 2,516 2,988 3,202 Deferred taxes 5,829 5,469 6,163 Goodwill 73,425 73,425 73,425 Core deposit intangible 5,342 5,535 5,728 Foreclosed assets, net 602 ? ? Other assets 13,322 15,080 16,811 TOTAL ASSETS $ 2,223,603 $ 1,775,662 $ 1,690,324 LIABILITIES AND SHAREHOLDERS? EQUITYDeposits: Noninterest-bearing demand $ 789,770 $ 627,793 $ 626,569 Money market, interest 620,719 525,371 514,366 checking and savingsTime deposits 194,508 197,876 172,758 Total deposits 1,604,997 1,351,040 1,313,693 Borrowings 150,000 140,000 90,000 Paycheck Protection Program 179,125 ? ? Liquidity FacilitySenior secured debt 6,500 8,600 9,600 Accrued interest payable and 16,032 12,715 15,226 other liabilitiesTotal liabilities 1,956,654 1,512,355 1,428,519 Total shareholders? equity 266,949 263,307 261,805 TOTAL LIABILITIES AND $ 2,223,603 $ 1,775,662 $ 1,690,324 SHAREHOLDERS? EQUITY Shares outstanding 11,697,766 11,662,603 11,635,531 Book value per share $ 22.82 $ 22.58 $ 22.50 Tangible book value per $ 16.09 $ 15.81 $ 15.70 share ^(2)

(1 ) Includes $138 thousand of reserves for accrued interest receivable related to loans on deferment at June 30, 2020.(2 ) Non-GAAP measure. See GAAP to non-GAAP Reconciliation.

First Choice Bancorp and Subsidiary

Condensed Consolidated Statements of Income (unaudited)

Three Months Ended Six Months Ended June 30, June 30, March 31, June 30, 2020 2019 2020 2020 2019 (dollars in thousands, except per share amounts) INTEREST and DIVIDEND INCOMEInterest and fees $ 21,348 $ 20,780 $ 21,344 $ 42,128 $ 42,260 on loansInterest oninvestment 225 218 215 443 451 securitiesInterest ondeposits at other 92 501 454 593 899 financialinstitutionsDividends on FHLB 179 245 206 424 448 and other stockTotal interest and 21,844 21,744 22,219 43,588 44,058 dividend incomeINTEREST EXPENSE Interest onsavings, interest 318 1,109 1,254 1,427 2,493 checking and moneymarket accountsInterest on time 856 995 1,463 1,851 2,468 depositsInterest on 197 376 484 573 714 borrowingsInterest on PPP 112 ? ? 112 ? Liquidity FacilityInterest on senior 57 91 182 148 355 secured notesTotal interest 1,540 2,571 3,383 4,111 6,030 expenseNet interest 20,304 19,173 18,836 39,477 38,028 incomeProvision for loan 2,100 2,700 550 4,800 900 losses ^(1)Net interestincome after 18,204 16,473 18,286 34,677 37,128 provision for loanlossesNONINTEREST INCOME Gain on sale of ? 377 1,271 377 2,199 loansService chargesand fees on 447 555 564 1,002 1,104 deposit accountsNet servicing fees (9 ) 224 287 215 521 Other income 617 259 200 876 620 Total noninterest 1,055 1,415 2,322 2,470 4,444 incomeNONINTEREST EXPENSESalaries and 6,386 7,230 6,857 13,616 13,080 employee benefitsOccupancy and 1,108 1,063 987 2,171 2,416 equipmentProfessional fees 450 471 426 921 845 Data processing 874 807 639 1,681 1,243 Office, postageand 289 258 255 547 527 telecommunicationsDeposit insuranceand regulatory 198 61 120 259 315 assessmentsLoan related 226 275 71 501 285 Customer service 328 372 273 700 750 relatedAmortization ofcore deposit 193 193 197 386 393 intangibleOther expenses 1,048 789 780 1,837 1,451 Total noninterest 11,100 11,519 10,605 22,619 21,305 expenseIncome before 8,159 6,369 10,003 14,528 20,267 taxesIncome taxes 2,429 1,823 3,192 4,252 6,448 Net income $ 5,730 $ 4,546 $ 6,811 $ 10,276 $ 13,819 Net income per $ 0.49 $ 0.39 $ 0.58 $ 0.88 $ 1.17 share-dilutedWeighted average 11,606,280 11,632,050 11,675,057 11,619,149 11,741,910 shares - diluted

Includes $138 thousand of reserves for accrued interest receivable related(1 ) to loans on deferment for the three months and six months ended June 30, 2020.

First Choice Bancorp and Subsidiary

Average Balance Sheets and Yield Analysis

Three Months Ended June 30, 2020 March 31, 2020 June 30, 2019 Average Interest Yield Average Interest Yield Average Interest Yield Balance Income / / Cost Balance Income / / Cost Balance Income / / Cost Expense Expense Expense (dollars in thousands) Interest-earning assets: Loans (1) $ 1,738,172 $ 21,348 4.94 % $ 1,404,652 $ 20,780 5.95 % $ 1,334,188 $ 21,344 6.42 %Investment securities 42,553 225 2.13 % 36,200 218 2.42 % 36,337 215 2.37 %Deposits at other financial 186,741 92 0.20 % 157,743 501 1.28 % 83,183 442 2.13 %institutionsFederal funds sold/resale ? ? ? ? ? ? 2,018 12 2.39 %agreementsRestricted stock investments 14,534 179 4.95 % 14,524 245 6.78 % 13,932 206 5.93 %and other bank stocksTotal interest-earning assets 1,982,000 21,844 4.43 % 1,613,119 21,744 5.42 % 1,469,658 22,219 6.06 % Noninterest-earning assets 127,208 114,282 110,082 Total assets $ 2,109,208 $ 1,727,401 $ 1,579,740 Interest-bearing liabilities: Interest checking $ 251,398 $ 101 0.16 % $ 156,407 $ 262 0.67 % $ 111,116 $ 298 1.08 %Money market accounts 298,040 207 0.28 % 318,465 798 1.01 % 271,067 900 1.33 %Savings accounts 30,104 10 0.13 % 28,264 49 0.70 % 28,825 56 0.78 %Time deposits 91,051 292 1.29 % 117,567 490 1.68 % 150,601 674 1.80 %Brokered time deposits 90,349 564 2.51 % 92,844 505 2.19 % 128,555 789 2.46 %Total interest-bearing 760,942 1,174 0.62 % 713,547 2,104 1.19 % 690,164 2,717 1.58 %depositsBorrowings 145,440 197 0.54 % 92,143 376 1.64 % 77,442 484 2.51 %Paycheck Protection Program 127,962 112 0.35 % ? ? ? % ? ? ? %Liquidity FacilitySenior secured notes 6,754 57 3.39 % 8,022 91 4.56 % 12,398 182 5.89 %Total interest-bearing 1,041,098 1,540 0.59 % 813,712 2,571 1.27 % 780,004 3,383 1.74 %liabilities Noninterest-bearing liabilities:Demand deposits 783,258 631,809 534,192 Other liabilities 16,684 17,011 13,882 Shareholders? equity 268,168 264,869 251,662 Total liabilities and $ 2,109,208 $ 1,727,401 $ 1,579,740 shareholders? equity Net interest spread $ 20,304 3.84 % $ 19,173 4.15 % $ 18,836 4.32 %Net interest margin 4.12 % 4.78 % 5.14 % Total deposits $ 1,544,200 $ 1,174 0.31 % $ 1,345,356 $ 2,104 0.63 % $ 1,224,356 $ 2,717 0.89 %Total funding sources $ 1,824,356 $ 1,540 0.34 % $ 1,445,521 $ 2,571 0.72 % $ 1,314,196 $ 3,383 1.03 %

Average loans include net discounts and net deferred loan fees and costs. Interest income on loans includes $1.3 million, $292 thousand and $236 thousand related to the accretion of net deferred loan fees for the(1 ) quarters ended June 30, 2020, March 31, 2020 and June 30, 2019. In addition, interest income includes $421 thousand, $624 thousand and $642 thousand of discount accretion on loans acquired in a business combination, including the interest recognized on the payoff of PCI loans, for the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019.

First Choice Bancorp and Subsidiary

Average Balance Sheets and Yield Analysis (continued)

Six Months Ended June 30, 2020 2019 Average Interest Yield Average Interest Yield Balance Income / / Cost Balance Income / / Cost Expense Expense (dollars in thousands) Interest-earning assets:Loans (1) $ 1,571,412 $ 42,128 5.39 % $ 1,307,613 $ 42,260 6.52 %Investment 39,377 443 2.26 % 36,714 451 2.48 %securitiesDeposits at otherfinancial 172,242 593 0.69 % 81,998 869 2.14 %institutionsFederal funds sold/ ? ? ? % 2,506 30 2.41 %resale agreementsFHLB and other bank 14,529 424 5.87 % 13,912 448 6.49 %stockTotalinterest-earning 1,797,560 43,588 4.88 % 1,442,743 44,058 6.16 %assets Noninterest-earning 120,745 108,915 assets $ 1,918,305 $ 1,551,658 Interest-bearing liabilities:Interest checking $ 203,903 $ 363 0.36 % $ 114,978 $ 607 1.06 %Money market 308,253 1,005 0.66 % 271,521 1,768 1.31 %accountsSavings accounts 29,184 59 0.41 % 31,575 118 0.75 %Time deposits 104,309 782 1.51 % 160,429 1,404 1.76 %Brokered time 91,596 1,069 2.35 % 94,814 1,064 2.26 %depositsTotalinterest-bearing 737,245 3,278 0.89 % 673,317 4,961 1.49 %depositsBorrowings 118,956 573 0.97 % 56,897 714 2.53 %Paycheck ProtectionProgram Liquidity 63,816 112 0.35 % ? ? ? %FacilitySenior secured 7,388 148 4.03 % 12,151 355 5.89 %notesTotalinterest-bearing 927,405 4,111 0.89 % 742,365 6,030 1.64 %liabilities Noninterest-bearing liabilities:Demand deposits 707,534 547,954 Other liabilities 16,848 11,415 Shareholders? 266,518 249,924 equity Total liabilitiesand shareholders? $ 1,918,305 $ 1,551,658 equity Net interest spread $ 39,477 3.99 % $ 38,028 4.52 %Net interest margin 4.42 % 5.32 % Total deposits $ 1,444,779 $ 3,278 0.46 % $ 1,221,271 $ 4,961 0.82 %Total funding $ 1,634,939 $ 4,111 0.51 % $ 1,290,319 $ 6,030 0.94 %sources

Average loans include net discounts and net deferred loan fees and costs. Interest income on loans includes $1.6 million and $467 thousand related to the accretion of net deferred loan fees for the six months ended June(1 ) 30, 2020 and June 30, 2019. In addition, interest income includes $1.0 million and $1.6 million of discount accretion on loans acquired in a business combination, including the interest recognized on the payoff of PCI loans, for the six months ended June 30, 2020 and June 30, 2019.

First Choice Bancorp and Subsidiary

Loan Composition

June 30, 2020 March 31, 2020 December 31, 2019 Amount Percentage Amount Percentage Amount Percentage of Total of Total of Total (dollars in thousands) Constructionand land $ 218,226 11.8 % $ 233,607 16.2 % $ 249,504 18.1 %developmentReal estate: Residential 39,145 2.1 % 42,904 3.0 % 43,736 3.2 %Commercialreal estate - 162,508 8.8 % 148,517 10.3 % 171,595 12.5 %owner occupiedCommercialreal estate - 502,693 27.3 % 476,472 33.2 % 423,823 30.8 %non-owneroccupiedCommercial and 335,411 18.2 % 350,090 24.3 % 309,011 22.5 %industrialSBA loans ^(1) 586,820 31.8 % 187,407 13.0 % 177,633 12.9 %Consumer 34 ? % 450 ? % 430 ? %Total loansheld forinvestment, $ 1,844,837 100.0 % $ 1,439,447 100.0 % $ 1,375,732 100.0 %net ofdiscountsNet deferred (13,218 ) (1,392 ) (1,057 ) loan fees ^(1)Total loansheld for $ 1,831,619 $ 1,438,055 $ 1,374,675 investmentAllowance forloan losses ^ (17,822 ) (16,218 ) (13,522 ) (2)Total loansheld for $ 1,813,797 $ 1,421,837 $ 1,361,153 investment,net

(1 ) Includes PPP loans with total outstanding principal of $400.7 million and net unearned fees of $11.5 million at June 30, 2020.(2 ) Includes $138 thousand of reserves for accrued interest receivable related to loans on deferment at June 30, 2020.

Total loans held for investment

June 30, March 31, December 31, 2020 2020 2019 (dollars in thousands) Gross loans held for $ 1,852,768 $ 1,448,082 $ 1,385,142 investment ^(1)Unamortized net (7,931 ) (8,635 ) (9,410 )discounts ^(2)Net unamortizeddeferred origination (13,218 ) (1,392 ) (1,057 )fees ^(1)Total loans held for $ 1,831,619 $ 1,438,055 $ 1,374,675 investment

(1 ) Includes PPP loans with total outstanding principal of $400.7 million and net unearned fees of $11.5 million at June 30, 2020. Unamortized net discounts include discounts related to the retained portion of SBA loans and net discounts on Non-PCI acquired loans. At June 30, 2020, net discounts related to loans acquired in the PCB acquisition(2 ) totaled $4.8 million that is expected to be accreted into interest income over a weighted average remaining life of 4.3 years. At March 31, 2020 and December 31, 2019, net discounts related to loans acquired in the PCB acquisition totaled $5.4 million and $6.0 million.

Allowance for Loan losses

For the Three Months Ended Six Months Ended June 30, June 30, March June 30, 2020 2019 2020 31, 2020 2019 (dollars in thousands) Balance,beginning of $ 16,218 $ 13,522 $ 11,426 $ 13,522 $ 11,056 periodProvision for 2,100 2,700 550 4,800 900 loan lossesCharge-offs (550 ) (28 ) (122 ) (578 ) (124 )Recoveries 54 24 199 78 221 Net(charge-offs) (496 ) (4 ) 77 (500 ) 97 recoveriesBalance, end $ 17,822 $ 16,218 $ 12,053 $ 17,822 $ 12,053 of period Annualized net(charge-offs) (0.11 ) ? % 0.02 % (0.06 ) 0.01 %recoveries to % %average loans

Credit Quality (1)

June 30, March December 2020 31, 2020 31, 2019 (dollars in thousands) Accruing loans past due 90 days or more $ 267 $ ? $ ? Non-accrual loans 7,999 8,984 11,107 Troubled debt restructurings on 150 151 158 non-accrualTotal nonperforming loans 8,416 9,135 11,265 Foreclosed assets 602 ? ? Total nonperforming assets $ 9,018 $ 9,135 $ 11,265 Troubled debt restructurings - on $ 319 $ 319 $ 321 accrual Nonperforming loans as a percentage of 0.46 % 0.64 % 0.82 %total loans held for investmentNonperforming assets as a percentage of 0.41 % 0.51 % 0.67 %total assetsAllowance for loan losses as apercentage of total loans held for 0.97 % 1.13 % 0.98 %investmentAllowance for loan losses as apercentage of total loans held for 1.24 % 1.13 % 0.98 %investment without PPP loansAllowance for loan losses as a 211.76 % 177.54 % 120.04 %percentage of nonperforming loansAllowance for loan losses as a 197.63 % 177.54 % 120.04 %percentage of nonperforming assetsAccruing loans held for investment past $ 353 $ 2,306 $ 1,767 due 30 - 89 days

Excludes purchased credit impaired loans with a carrying value of $1.0(1 ) million, $1.1 million and $1.1 million at June 30, 2020, March 31, 2020 and December 31, 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.

For the Three Months Ended Six Months Ended June 30, June 30, March 31, June 30, 2020 2019 2020 2020 2019 (dollars in thousands) Efficiency RatioNoninterestexpense $ 11,100 $ 11,519 $ 10,605 $ 22,619 $ 21,305 (numerator) Net interest $ 20,304 $ 19,173 $ 18,836 $ 39,477 $ 38,028 incomePlus:Noninterest 1,055 1,415 2,322 2,470 4,444 incomeTotal netinterestincome and $ 21,359 $ 20,588 $ 21,158 $ 41,947 $ 42,472 noninterestincome(denominator)Efficiency 52.0 % 56.0 % 50.1 % 53.9 % 50.2 %ratio Pre-taxpre-provision incomeNet interest $ 20,304 $ 19,173 $ 18,836 $ 39,477 $ 38,028 incomeNoninterest 1,055 1,415 2,322 2,470 4,444 incomeTotal netinterestincome and 21,359 20,588 21,158 41,947 42,472 noninterestincomeLess:Noninterest 11,100 11,519 10,605 22,619 21,305 expensePre-taxpre-provision $ 10,259 $ 9,069 $ 10,553 $ 19,328 $ 21,167 income Return onAverageAssets, Equity,TangibleEquityNet income $ 5,730 $ 4,546 $ 6,811 $ 10,276 $ 13,819 Average $ 2,109,208 $ 1,727,401 $ 1,579,740 $ 1,918,305 $ 1,551,658 assetsAverageshareholders? 268,168 264,869 251,662 266,518 249,924 equityLess: Averageintangible 78,901 79,083 79,731 78,985 79,829 assetsAveragetangible $ 189,267 $ 185,786 $ 171,931 $ 187,533 $ 170,095 common equity Return onaverage 1.09 % 1.06 % 1.73 % 1.08 % 1.80 %assetsReturn onaverage 8.59 % 6.90 % 10.86 % 7.75 % 11.15 %equityReturn onaverage 12.18 % 9.84 % 15.89 % 11.02 % 16.38 %tangiblecommon equity

Quarter ended June 30, March 31, December 31, 2020 2020 2019 (dollars in thousands, except per share amounts)Tangible Common Equity Ratio/ Tangible Book Value Per ShareShareholders? equity $ 266,949 $ 263,307 $ 261,805 Less: Intangible assets 78,767 78,960 79,153 Tangible common equity $ 188,182 $ 184,347 $ 182,652 Total assets $ 2,223,603 $ 1,775,662 $ 1,690,324 Less: Intangible assets 78,767 78,960 79,153 Tangible assets $ 2,144,836 $ 1,696,702 $ 1,611,171 Equity to assets ratio 12.01 % 14.83 % 15.49 %Tangible common equity to 8.77 % 10.87 % 11.34 %tangible asset ratio Shares outstanding 11,697,766 11,662,603 11,635,531 Book value per share $ 22.82 $ 22.58 $ 22.50 Tangible book value per share $ 16.09 $ 15.81 $ 15.70