First in Speed | Service | Solutions
from the Chairman and President
Board of Directors
Dear Valued Shareholders, Customers and Staff:
We are very pleased to report our 2018 financial results, which reflect the
increasing strength of the franchise we are building. For the full year, we
generated more than $15 million in net income – a record high for the
Company – while generating significant improvement in our level of returns.
Our strong financial performance is a testament to the hard work of the
entire First Choice Bank team to provide a superior banking experience
to our customers and continue to effectively communicate our value
proposition to win new business among our target small- and medium-size
commercial clients.
2018 was a year filled with significant milestones for the Company, most
notably the completion of our merger with Pacific Commerce Bank. This
acquisition has expanded our presence in Los Angeles and extended our
footprint down to the Mexican border, which has increased our ability to serve
communities in Southern California and continue growing our customer base.
The integration of the two companies has gone very smoothly, enabling us to
capture the projected synergies from this combination and deliver improved
service to our customers through our larger branch network and broader
set of products and services. During 2018, we also listed on the Nasdaq
stock exchange (and rang the closing bell!) and had our stock added to the
Russell Indexes. Collectively, we believe these important milestones have
strengthened and added value to our franchise.
Looking ahead, we believe we are well-positioned to capitalize on our larger
presence in Southern California, generate solid balance sheet growth, and
drive further increases in our level of profitability. We have built a strong
foundation for our franchise that we believe will result in sustainable
growth in the years ahead. We would like to thank our shareholders for
their continued support, our employees for their commitment to providing
exceptional service, and our customers for the privilege of serving their
financial needs. While 2018 was a record year for the Company, we truly
believe that our best days are still ahead.
Respectfully,
Peter Hui
Chairman
Robert M. Franko
President/CEO
first choice bank Executive Management
Peter Hui
Chairman
Phillip Thong
Vice Chairman
Robert M. Franko
Director
President/CEO
Roshan Bhakta
Director
James Gray
Director
Thomas Iino
Director
Fred Jensen
Director
Luis Maizel
Director
Pravin Pranav
Director
Maria Salinas
Director
Not Pictured: Max Freifeld, Director
Robert M. Franko
Director
President/CEO
Lynn Hopkins
EVP/Chief Financial
Officer
Yolanda S. Su
EVP/Chief Operations
Administrator
Gene May
EVP/Chief Credit
Officer
Khoi Dang
EVP/General Counsel
Board of Directors
Company
Profile
First Choice Bancorp (Nasdaq: FCBP), headquartered in Cerritos, California, is the sole shareholder of, and the
registered bank holding company for, First Choice Bank. 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. The Bank conducts business through 9 full service branches and 2 lending
offices located in Los Angeles, Orange and San Diego Counties, and is a Preferred Small Business Administration
(SBA) Lender.
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 innovative financial solutions and professionalism
and are committed to being “First in Speed, Service, and Solutions.”
locations
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COMMUNITY SERVICE:
Volunteer Hours:
847
Donations:
$95,200
CRA Investments:
$7.2 million
Community
Development Loans:
$65.1 million
Community activities
LA SAVES
First Choice Bank is proud of its longstanding collaboration
with Los Angeles Saves, an organization focused on making
savings a priority for everyone. FCB volunteers participated
in several LA Saves events throughout 2018, all of which
were designed to motivate and encourage low-to-moderate
income individuals and families in our local communities
to save money, reduce debt and build wealth over time. Here at the Bank, we are
dedicated to working with our clients to help them achieve their financial goals, and
the LA Saves events are a great way to encourage success for everyone.
FIRST CHOICE BANK’S 8TH ANNUAL CHARITY GOLF TOURNAMENT
First Choice Bank’s 8th Annual Charity Golf Tournament took place on October 25,
2018, and it was the most successful one yet! A record-high $111,600 was donated to
18 local charities, with $55,800 given by the Bank and an additional $55,800 matched
by the Much is Given Foundation. The event also spotlighted the Bank’s “Citizen of the
Year” for 2018, Mickey Segal, whose philanthropic activities have helped to raise tens
of millions of dollars for countless individuals in need. We also honored the late Uka
Solanki, First Choice Director who passed away unexpectedly in September, with the
FCB Inspiration Award, recognizing the great humanitarian efforts he made during
his lifetime. Each year, the success of this event is dependent on the generosity of
the sponsors and participants. We are very grateful for all who contributed and look
forward to another successful event this year.
FINANCIAL LITERACY WITH FIRST
CHOICE BANK AND JUNIOR
ACHIEVEMENT
As part of its ongoing partnership with
Junior Achievement® of Southern
California, First Choice Bank participated
in two financial literacy events over the
last year at the JA Finance Park in San
Diego. The first included students from
Holly Drive Leadership Academy learning
a multitude of money management
skills. Bank employees helped the
students create a monthly budget,
including typical housing, food and
insurance expenses, and answered
questions the students had about basic
money matters, such as paying bills.
At the second event, FCB employees
volunteered at JA BizTown. The day’s
activities, which included fifth-grade
students from Lemon Crest Elementary
visiting a simulated town to operate
banks, manage restaurants, write checks
and vote for mayor, were a real-world
introduction for the kids to discover
the connection between spending
and having money in a bank. Our FCB
volunteers were inspired over and over
again by the students’ drive to learn
about managing money and were
happy to be a part of creating a
strong financial foundation for
these young people.
FCB PARTNERS WITH THE ABC EDUCATION FOUNDATION
First Choice Bank was honored to be recognized for its recent
contributions to the ABC Education Foundation (ABCEF). The
organization provides financial support for the schools within
the ABC Unified School District in order to maintain consistently
high-quality educational opportunities. As part of its ongoing
partnership with ABCEF, the Bank donated funds that were used
to help support 23 programs at 15 schools during the 2018-2019
school year. We are pleased to be part of making a positive
difference in the lives of so many children.
clientSpotlights
PINN Investments
Based in Newport Beach, PINN Investments is a private real estate
firm focused on hotel development, investment and management
in gateway cities and destination markets throughout California. The
team at PINN Investments executes the full spectrum of real estate
capabilities, from acquisitions, project entitlements and development,
all the way through asset management and dispositions. The firm
believes that smart leadership in a collaborative and supportive
environment is crucial to its success.
As part of its long-standing relationship
with the company, First Choice Bank
has become an extension of the team,
assisting in working toward the same
goal of continuing success.
the boxing club
The Boxing Club (TBC) was created with a belief
that fight arts – Boxing, Muay Thai, Jiu Jitsu,
MMA, High Intensity Interval Training-based
fitness and more – can be an effective and
fun platform for overall fitness and health. The
positive and welcoming culture and community
within the club is what makes TBC special and
sets it apart from traditional gyms. After the
success of its first location in UTC/La Jolla, TBC
was looking to expand its business to a second
location in the East Village
area of San Diego. As a
small up-and-coming
company, TBC found
it challenging to
find a bank that
believed in its
vision. First Choice
Bank followed
its commitment
of being First in
Service to make The
Boxing Club’s goal of
expansion a reality.
w AlderLaw has just one goal – to obtain the best results
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for its clients. Since the firm began in 2000, it has
done just that, successfully recovering over $1 billion
for clients while growing the company from a solo
practice to a firm of over 15 attorneys. Founder Michael
Alder and his staff manage each case with a team
approach, ensuring every client receives the attention
he or she deserves. Knowing that
First Choice Bank has a similar
collaborative process with
its clients, finding just
the right solution for
each customer every
time, is the reason why
AlderLaw chooses
FCB for all of its
banking needs.
heritage gloBal partners
lantzman
lending
With more than 50 years of combined
experience, the officers of Lantzman Lending
have organized operations around sound
business practices, integrity, efficiency, and
practical approaches to real estate lending.
The firm prides itself in being able to provide
financing to a wide variety of real estate
investors by creatively tailoring loan programs
around the needs of a particular borrower,
with the flexibility to accommodate most
scenarios with the intent of ensuring the
success of the borrower. The company made
the switch from a major, national bank to
First Choice Bank because of the availability
of better, more competitive products that suit
Lantzman’s business needs, as well as a level of
customer service and attentiveness that
exceeded expectations.
Since 1937, Heritage Global Partners has been a leading, full
service, global auction and asset advisory firm. Their managing
partners, Ross and Kirk Dove, bring over a half century of
worldwide experience and expertise in virtually every industrial
sector and geography. Together, they have conducted over 4,000
industrial auctions, spanning 30 countries. They chose First
Choice Bank for its broad array of Treasury Management Services
and competitive cost structure. “FCB has all the products and
horsepower of a large commercial bank but delivers service how
banks used to by being very quick and responsive. Their mantra
of being First in Speed, Service and Solutions shines through.”
Stetson Powell Orthopedics and Sports Medicine provides a wide
assortment of innovative treatment options for sports-related injuries
and orthopedic disorders. The company’s long history of excellence
and innovation in orthopedic treatments benefit patients from all
backgrounds, including recreational and elite athletes. Located in Santa
Monica and Burbank, the doctors are active members of numerous
professional organizations and share a common commitment to the
quality of life for all of their patients. Stetson Powell turns to First Choice
Bank for its financial needs because FCB makes business banking easy,
giving the doctors more time to focus on their patients.
Stetson Powell Orthopedics
and Sports Medicine
ALPS GROUP OF HOTELS
The Alps Group of Hotels is a hospitality development and management
company based in San Diego, California. The firm was established in 1999
with its first venture in Solana Beach, California. Ever since then, the company
has been growing and thriving in the Southern California market. “The
hotel industry is about making the visitor experience superb. We expect the
same from our banker. First Choice Bank is able to provide a better banking
experience than the big banks.”
Spectrum Property Management is the largest privately
owned commercial property management firm in San
Diego, providing a full range of management services
to private equity owners and associations throughout
Southern California. Since the firm’s inception in 1988,
Spectrum has enhanced the value of an expansive
portfolio of properties, consistently meeting or
exceeding client goals and maintaining a strong
rapport with industry vendors, brokers and associates.
The company chose First Choice Bank as its business
partner because the Bank has the sophisticated level
of technology Spectrum needs to instantly open new
accounts for its clients and access data immediately.
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hp investors
HP Investors is a real estate investment firm focusing on the
acquisition, development, and management of commercial
properties in high barrier-to-entry markets on the West Coast of
the United States. The firm leverages its strength in quantitative
analysis, identifying current industry and market trends, to
structure and create investment opportunities. Time is of the
essence with many deals, and slow lending is a frustration in the
real estate industry. HP Investors partners with First Choice Bank to
allow creative solutions with fast transactions.
by the numbers
SOLID LOAN YIELDS & NET
INTEREST MARGIN
Average Loan Yield
Net Interest Margin
Cost of Deposits
STRONG CAPITAL POSITION
(Bank only)
12/31/18
3/31/19
Well-Capitalized
Regulatory
Requirement
Tier 1 Leverage Ratio
12.03%
12.73%
5.00%
Tier 1 Risk-Based Capital Ratio
13.26%
13.51%
8.00%
Total Risk-Based Capital Ratio
14.18%
14.45%
10.00%
7%
6%
5%
4%
3%
2%
1%
0%
4Q17
1Q18
2Q18
3Q18
4Q18
1Q19
YEAR-OVER-YEAR FINANCIAL DATA
($ in millions)
Organic
Acquisitions (PCB)
$248
$248
$133
$1,650
$1,623
$536
$1,292
$1,279
$400
$1,252
$475
$1,215
$1,087
$904
$879
$752
$773
$777
$106
$115
12/31
2017
12/31
2018
3/31
2019
12/31
2017
12/31
2018
3/31
2019
12/31
2017
12/31
2018
3/31
2019
12/31
2017
12/31
2018
3/31
2019
TOTAL ASSETS
TOTAL LOANS
TOTAL DEPOSITS
TOTAL EQUITY
2018
First Choice Bancorp and Subsidiary Consolidated Balance Sheets (in thousands, except share data)Year ended December 31,20182017 ASSETSCash and due from banks$17,874$5,405Interest-bearing deposits at other banks176,50297,727Federal funds sold3,000—Total cash and cash equivalents197,376103,132Securities available-for-sale, at fair value29,54332,460Securities held-to-maturity, at cost5,3225,300Equity securities, at fair value2,5382,542Restricted stock investments, at cost12,8553,640Loans held for sale, at lower of cost or fair value28,02210,599Loans held for investment1,250,981741,713 Allowance for loan losses(11,056)(10,497)Loans held for investment, net1,239,925731,216Accrued interest receivable5,0693,108Premises and equipment1,9731,035Servicing asset3,1862,618Deferred taxes, net8,6664,495Goodwill73,425—Core deposit intangible6,576—Other assets8,0253,650Total assets$1,622,501$903,795LIABILITIES AND SHAREHOLDERS’ EQUITY Deposits: Noninterest-bearing demand$546,713$235,584 Money market, interest checking and savings465,123372,699 Time deposits240,503164,396Total deposits1,252,339772,679Short-term borrowings104,99820,000Senior secured notes8,450350Accrued interest payable and other liabilities8,6455,072Total liabilities1,374,432798,101 Shareholders’ equity: Preferred stock 100,000,000 shares authorized, none outstanding—— Common stock no par value; 100,000,000 shares authorized; issued and outstanding: 11,726,074 at December 31, 2018 and 7,260,119 at December 31, 2017217,51487,837 Additional paid-in capital7,2691,940 Retained earnings23,98516,459 Accumulated other comprehensive loss - net(699)(542)Total shareholders’ equity248,069105,694TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,622,501$903,795First Choice Bancorp and Subsidiary Consolidated Statements of Income (in thousands, except share data)Year ended December 31,20182017 INTEREST INCOMEInterest and fees on loans$61,075$38,624Interest on investment securities922959Interest on deposits in other financial institutions1,872970Dividends on restricted stock investments508266 Total interest income64,37740,819 INTEREST EXPENSE Interest on savings, interest checking and money market accounts4,3643,911Interest on time deposits3,6861,890Interest on borrowings660240 Total interest expense8,7106,041Net interest income55,66734,778Provision for loan losses1,520642Net interest income after provision for loan losses54,14734,136 NONINTEREST INCOME Gain on sale of loans1,5053,596Service charges and fees on deposit accounts1,241329Net servicing fees509701Other income355435 Total noninterest income3,6105,061 NONINTEREST EXPENSE Salaries and employee benefits18,07714,560Occupancy expenses3,0492,084Data processing2,2931,491Professional fees1,598972Office, postage and telecommunications938720Deposit insurance and regulatory assessments460467Loan related483345Customer service related865618Merger, integration and public company registration costs5,385—Amortization of core deposit intangible332—Other expenses2,7122,497 Total noninterest expense36,19223,754Income before taxes21,56515,443Income taxes6,4358,089NET INCOME$15,130$7,354 Net income per share: Basic$1.66$1.02 Diluted$1.64$1.02Weighted-average common shares outstanding Basic9,015,2037,102,683 Diluted9,143,2427,138,404 First in Speed | Service | Solutions
www.FirstChoiceBankCA.com
1.877.256.9809