US Metro Bancorp (OTCQX: USMT): Mr. Dong Il Kim, President and CEO, announced US Metro Bancorp and US Metro Bank’s financial results for the fourth quarter 2021. As of January 2, 2020, US Metro Bancorp (“Bancorp”), a small bank holding company (BHC), was formed making United States Metro Bank its lone subsidiary. On a consolidated basis the Bancorp earned $4,528,000 in the fourth quarter of 2021, compared to $4,218,000 in the third quarter of 2021.
For the twelve months ending December 31, 2021 the consolidated Bancorp earned $15,286,000 compared to $4,629,000 for the twelve months ending December 31, 2020. On a year-to-date basis the Bancorp recorded an annualized return on average assets (“ROAA”) of 1.72% and an annualized return on average equity (“ROAE”) of 21.63%. With 16,230,000 shares outstanding, earnings per share (“EPS”) for the fourth quarter 2021 was $0.28 compared to $0.26 in the third quarter 2021. For the twelve months ended December 31, 2021, EPS was $0.94 compared to $0.29 for the twelve months ending December 31, 2020. At December 31, 2021, the Bancorp’s Book Value was $4.70 compared to $3.87 per share a year earlier.
US Metro Bank recorded year over year loan growth of $178.2 million or 30%. Included in the annual loan growth is a decrease of $45.6 million in Payroll Protection Program (PPP) loans. Core loan (non PPP loans), year over year growth was $222.9 million or 42%. Deposits grew $189.1 million or 28% over December 31, 2020. Five of a total of six branches have deposits of over $100 million. Net Interest Income increased $7.8 million or 37% for the twelve months ending December 31, 2021, compared to the same period a year earlier with interest income increasing $5.4 million while interest expense decreased $2.4 million. SBA premium income for the twelve months ending December 31, 2021, was $15.9 million compared to $3.9 million for the same period in 2020. Net income of $16,424,000 for the twelve months ending December 31, 2021, compares to $5,372,000 reported for the same twelve months in 2020, a year over year increase of $11.1 million or 206%. During the second quarter of 2021, the Bank started an investment portfolio with purchases of mortgage-backed securities and municipal securities now totaling $69.3 million with the portfolio yielding 1.45% on a tax equivalent basis.
The Bank reported total assets of $967.1 million as of December 31, 2021, representing a 26% increase compared to the reporting period ending December 31, 2020. The Bank opened a branch office on April 3, 2017, on Wilshire Boulevard in Koreatown, Los Angeles and a new branch in downtown Los Angeles’ Fashion District on November 1, 2017. On December 5, 2018, a fifth branch was opened in Buena Park (Fullerton Branch), California. On December 20, 2019, a sixth branch was opened in Torrance, California. As of December 31, 2021, the Wilshire branch recorded a total deposit base of $116.1 million including $25.9 million in non-interest bearing deposits. The Fashion District Branch had $121.8 million in total deposits at December 31, 2021, including $57.9 million in non-interest bearing deposits. The Fullerton Branch recorded a deposit base of $172.1 million with $45.3 million in non-interest bearing deposits at December 31, 2021, and the newest Torrance Branch had $102.7 million in deposits at December 31, 2021, including $36.2 million in non-interest bearing deposits. The Bank’s Headquarters Branch in Garden Grove had $216.4 million in deposits including $63.9 million in non-interest bearing deposits at December 31, 2021. The Anaheim Branch, the only branch not in a Korean American community, focusing on loan originations, carries a loan to deposit ratio of 166% with total deposits of $67.7 million including $39.6 million in non-interest bearing deposits with an overall cost of funds of 0.12%. Total Bank deposits ended the fourth quarter of 2021 at $857.1 million, a 28% increase from $668.0 million at December 31, 2020. Non-interest bearing deposits grew to $300.9 million at December 31, 2021 from $192.7 million at December 31, 2020, an increase of 56%.
SBA loan originations for the twelve months ending December 31, 2021, were $204.4 million compared to $65.6 million for the same twelve month period in 2020. Due to the COVID-19 Pandemic and the uncertainty of current economic climate, the Bank closed three of its four SBA Loan Production Offices on April 15, 2020. The Dallas LPO remained open in 2020, and in November, 2020, the Bank reopened the Seattle LPO. During the third quarter 2021, the Bank opened two new LPOs, one in the Inland Empire region of Southern California and one in the Bay Area of Northern California. In January 2022, the Bank opened two additional LPOs, one in Fresno, California and one in Sacramento, California.
Loan quality remains good with non-performing assets as a percent of total loans of 0.16% at December 31, 2021, compared to 0.26% as of December 31, 2020. The Bank had no Other Real Estate Owned at December 31, 2021, and one small TDR of $78 thousand. Allowance for loan and lease losses (ALLL) to gross loans was 1.50% as of December 31, 2021, compared to 1.56% as of December 31, 2020. Excluding PPP Loans, the ALLL was 1.54% of gross loans at September 30, 2021. With the uncertainty in the economy related to the COVID-19 Pandemic, the Bank recorded $3.0 million in provision for loan loss expense, for the twelve months ending December 31, 2021, compared to $4.5 million recorded for the twelve months ending December 31, 2020.
“The Board of Directors is pleased with the continued growth and profitability of the Bank during the fourth quarter and full year of 2021. Beginning with the interest rate decreases seen mid-March of last year, earnings on liquid investments have decreased substantially. Fortunately SBA loan demand has been very strong. The Bank has been proactive in implementing elements of the Strategic Plan and has formed a Mortgage Finance Group which has contributed a combined $96.6 million in outstanding mortgage warehouse loans and residential mortgages, along with $59.9 million in new deposits, as of December 31, 2021. Through the COVID-19 pandemic economic stimulus programs, the Bank funded a total of $112 million in PPP loans of which $20 million are still outstanding as of December 31, 2021. During 2020 the Bank provided COVID-19 related loan modifications for loans totaling $150 million for our borrowers. As of December 31, 2021, there are no loans remaining on COVID-19 modified terms. We implemented the Bank’s Pandemic Contingency Plan with staff working remotely if possible and practicing social distancing through telecommunication meetings and rotating staff through shelter at home practices. As of this writing, the Bank continues to practice these protocols and meeting virtually, whenever possible. Capital and Liquidity remain strong and USMB is well positioned to continue managing through the Pandemic,” said Mr. Kim.
On a somber note, the Bank and Bancorp lost our dedicated Director and Board Audit Chairman, Leonard H. Rushfield, who passed away in December, 2021. Mr. Johann Minkyun You has joined the Bank and Bancorp Boards and will serve as the Board’s Audit Committee Chairman.
US Metro Bank is a California chartered, full service commercial nonmember bank headquartered in Garden Grove, California with six branch offices in California – Garden Grove, Anaheim, Buena Park (Fullerton Branch), Koreatown/Los Angeles, Fashion District/Los Angeles, Torrance and with loan production offices in Dallas, Seattle, Inland Empire of Southern California, Northern California, Fresno and Sacramento. The Bank opened for business on September 15, 2006, and offers deposit and loan products (including commercial real estate, commercial and industrial and SBA loans), as well as related banking services to its targeted client base of executives, professionals, and small to medium-sized businesses, generally in the Southern California area.