Extraordinary Expenses Created High Loss, 1st Pacific Says

1st Pacific Bank of California, which announced the sale of the bank last month to First Business Bank, reported a second quarter net loss of $855,000, compared to a net loss of $429,000 for the like quarter of last year.

The bank blamed the higher loss on several extraordinary expenses including a loss on subleasing part of one of its offices; costs related to foreclosed real estate; and a special assessment by the Federal Deposit Insurance Corp.

During the quarter, 1st Pacific said its deposits decreased by $25 million to $338 million, while assets were down by nearly $31 million to $419.9 million.

Nonperforming assets at June 30 were $12.7 million or 3.03 percent of total assets, compared to March 31 when it had $8.9 million in nonperforming assets for 1.93 percent of the total.

1st Pacific said its total risk-based capital as of June 30 was 8.49 percent, above the 8 percent ratio to be adequately capitalized. That’s one of the main reasons it arranged to be sold to First Business, which is capital rich, but only about $100 million in total assets.

First Business is offering $1.40 per share plus some recoveries on charged-off loans and a lawsuit for an aggregate price of about $7 million for the $400 million bank. The per-share price is about a third of 1st Pacific’s book value as of June 30 of $4.12.

The deal requires shareholder and regulatory approval and is expected to close in the fourth quarter.