Day: October 22, 2024

GUADALAJARA, Mexico, Oct. 21, 2024 (GLOBE NEWSWIRE) — Grupo Aeroportuario del Pacífico, S.A.B. de C.V. PACGAP (“the Company” or “GAP”) reports its consolidated results for the third quarter ended September 30, 2024 (3Q24). Figures are unaudited and prepared following International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

Summary of Results 3Q24 vs. 3Q23

• The sum of aeronautical and non-aeronautical services revenues increased by Ps. 402.8 million, or 6.4%. Total revenues increased by Ps. 839.7 million, or 11.4%.
• Cost of services increased by Ps. 251.9 million, or 21.3%.
• Income from operations increased by Ps. 70.2 million, or 1.9%.
• EBITDA increased by Ps. 237.8 million, or 5.6%, from Ps. 4,629.9 million in 3Q23 to Ps. 4,507.6 million in 3Q24. EBITDA margin (excluding the effects of IFRIC-12) went from 67.5% in 3Q23 to 67.0% in 3Q24.
• Comprehensive income increased by Ps. 69.1 million, or 2.7%, from Ps. 2,551.4 million in 3Q23 to Ps. 2,620.6 million in 3Q24.

Company’s Financial Position:

During 3Q24, there was a decrease in the Company’s aeronautical revenues compared to 3Q23, mainly due to the decline in passenger traffic, as a result of preventive reviews of Pratt & Whitney A320neo and A321neo engines, which affected the fleet operated by Volaris and VivaAerobus and that started in the third quarter of 2023 reaching its highest volume in the 3Q24. This decrease was offset by an increase in non-aeronautical revenues of 38.7%, generated mainly by the consolidation of the cargo and free trade zone business at the Guadalajara airport starting in July 2024. The Company reports a financial position of cash and cash equivalents as of September 30, 2024, of Ps. 15,828.0 million. During 3Q24, the Company refinanced the credit facilities with Citibanamex for Ps. 1,000.0 million and for USD$40.0 million, additionally, on September 5, 2024, the Company issued long-term bond certificates for an amount of Ps. 5,648.1 million, for capital investments and debt refinancing.

Passenger Traffic
During 3Q24, total passengers at the Company’s 14 airports decreased by 923.2 thousand passengers, a decrease of 5.7%, compared to 3Q23.

During 3Q23, the following new routes were opened:

Domestic:

^{Note: Frequencies can vary without prior notice.}

International:

^{Note: Frequencies can vary without prior notice.}

Domestic Terminal Passengers – 14 airports (in thousands):

^{*Cross Border Xpress (CBX) users are classified as international passengers.}

International Terminal Passengers – 14 airports (in thousands):

^{*CBX users are classified as international passengers.}

Total Terminal Passengers – 14 airports (in thousands):

^{*CBX users are classified as international passengers.}

CBX Users (in thousands):

Consolidated Results for the Third Quarter of 2024 (in thousands of pesos):

^{– Net income and comprehensive income per share for 3Q24 and 3Q23 were calculated based on 505,277,464 shares outstanding as of September 30, 2024, and September 30, 2023, respectively. U.S. dollar figures presented were converted from pesos to U.S. dollars at a rate of Ps. 19.6303 per U.S. dollar (the noon buying rate on September 30, 2024, as published by the U.S. Federal Reserve Board).
For purposes of consolidating our Jamaican airports, the average three-month exchange rate of Ps. 18.9229 per U.S. dollar for the three months ended September 30, 2024, was used.}

Revenues (3Q24 vs. 3Q23)

• Aeronautical services revenues decreased by Ps. 184.7 million, or 3.8%.
• Non-aeronautical services revenues increased by Ps. 587.5 million, or 38.7%.
• Revenues from improvements to concession assets increased by Ps. 436.9 million, or 41.1%.
• Total revenues increased by Ps. 839.7 million, or 11.4%.
  

• The change in aeronautical services revenues was primarily due to the following factors:
  1. Revenues at our Mexican airports decreased by Ps. 251.2 million or 6.1% compared to 3Q23, mainly due to the 5.4% decrease in passenger traffic.
  2. Revenues from Jamaican airports increased by Ps. 66.5 million, or 9.4%, compared to 3Q23. This was mainly due to the peso depreciation versus the U.S. dollar by 10.9%, compared to 3Q23, which went from an average exchange rate of Ps. 17.0621 in 3Q23 to Ps. 18.9229 in 3Q24. Passenger traffic decreased by 8.0%.
• The change in non-aeronautical services revenues was primarily driven by the following factors:
  1. Revenues at our Mexican airports increased by Ps. 573.4 million, or 45.5%, compared to 3Q23. Revenues from businesses operated directly by us increased by Ps. 444.5 million, or 100.3%, mainly due to the consolidation of a cargo and free trade zone business starting in July 2024 with revenues of Ps. 354.1 million. Revenues from businesses operated by third parties increased by Ps. 124.5 million, or 16.1%, mainly due to the opening of new commercial spaces, and the renegotiation of contract conditions. The business lines that grew the most were car rentals, food and beverages, time shares, and retail, all of which increased by Ps. 122.9 million, or 23.4%, offset by a decrease of Ps. 6.3 million in duty-free stores.
  2. Revenues from the Jamaican airports increased by Ps. 14.1 million, or 5.6%, compared to 3Q23, mainly due to the peso depreciation versus the U.S. dollar by 10.9%, compared to 3Q23. Revenues in U.S. dollars decreased by US$ 0.7 million, or 4.9%.

^{Figures are expressed in thousands of Mexican pesos.}

• Revenues from improvements to concession assets ¹
  Revenues from improvements to concession assets (IFRIC-12) increased by Ps. 436.9 million, or 41.1%, compared to 3Q23. The change was composed of :
  1. Improvements to concession assets at the Company’s Mexican airports increased by Ps. 299.7 million, or 28.9%, following investments under the Master Development Program for the 2020-2024 period.
  2. Improvements to concession assets at the Company’s Jamaican airports increased Ps. 137.2 million, or 504.1%.

________________________
_{¹ Revenues from improvements to concession assets are recognized in accordance with International Financial Reporting Interpretation Committee 12 “Service Concession Arrangements” (IFRIC 12). However, this recognition does not have a cash impact or impact on the Company’s operating results. Amounts included as a result of the recognition of IFRIC 12 are related to construction of infrastructure in each quarter to which the Company has committed. This is in accordance with the Company’s Master Development Programs in Mexico and Capital Development Programs in Jamaica. All margins and ratios calculated using “Total Revenues” include revenues from improvements to concession assets (IFRIC 12), and, consequently, such margins and ratios may not be comparable to other ratios and margins, such as EBITDA margin, operating margin or other similar ratios that are calculated based on those results of the Company that do have a cash impact.}

Total operating costs increased by Ps. 769.5 million, or 20.6%, compared to 3Q23, mainly due to the increase in the cost of improvements to concession assets (IFRIC-12) by Ps. 436.9 million and the cargo and free trade zone business consolidation.

The cost of services increased by Ps. 251.9 million, or 21.3%, while the depreciation and amortization increased by Ps. 167.5 million, or 27.0%. This was offset by a combined decrease of Ps. 81.8 million, or 5.0%, in concession taxes and technical assistance fees (excluding the cost of improvements to concession assets (IFRIC-12), operating costs increased Ps. 332.5 million, or 12.4%).

This increase in total operating costs was primarily due to the following factors:

Mexican airports:

• Operating costs increased by Ps. 694.8 million, or 23.4%, compared to 3Q23, primarily due to an increase in the cost of improvements to the concession assets (IFRIC-12) by Ps. 299.7 million, or 28.9%, an increase in the cost of services by Ps. 223.2 million, or 22.9%, an increase in depreciation and amortization by Ps. 152.7 million, or 30.6%, and a combined increase in technical assistance fees and concession taxes by Ps. 22.9 million, or 5.0% (excluding the cost of improvements to the concession assets (IFRIC-12), operating costs increased by Ps. 395.0 million or 20.5%).

The change in the cost of services at our Mexican airports during 3Q24 was mainly due to:

• Employee costs increased Ps. 125.0 million, or 32.2%, compared to 3Q23, mainly due to the consolidation of the cargo and free trade zone business of Ps. 86.5 million, as well as the hiring of 175 additional personnel during the last quarter of 2023 and 9M24, as well as the adjustments in salaries and cost related to changes in Labor Law.
• Maintenance expenses increased by Ps. 41.3 million, or 31.7%, compared to 3Q23, mainly due to the opening of new operational areas and the consolidation of the cargo and free trade zone business with maintenance expenses of Ps. 8.4 million.
• Safety, security, and insurance increased by Ps. 29.4 million, or 22.1%, compared to 3Q23, mainly due to the increase in the security headcount, minimum wages, and changes in Labor Law, the opening of new operational areas and the consolidation of the cargo and free trade zone business by Ps.4.8 million.
• Other operating expenses increased by Ps. 15.7 million, or 7.1%, compared to 3Q23, mainly due to a combined increase in services, professional fees, and travel expenses by Ps. 11.7 million, the consolidation of the cargo and free trade zone business with other operating expenses of Ps. 12.4 million. This was offset by the decrease in the allowance for expected credit losses by Ps. 4.8 million.

Jamaican Airport:

• Operating costs increased by Ps. 74.7 million, or 9.6%, compared to 3Q23, mainly due to a Ps. 137.2 million, or 504.1%, increase in the cost of improvements to concession assets (IFRIC-12), an increase in the cost of services by Ps. 28.7 million, or 13.8%, offset by the decrease in the concession taxes by Ps. 104.7 million, or 24.8%.

Operating income margin went from 49.4% in 3Q23 to 45.2% in 3Q24. Excluding the effects of IFRIC-12, the operating income margin went from 57.7% in 3Q23 to 55.3% in 3Q24. Income from operations increased by Ps. 70.2 million, or 1.9%, compared to 3Q23.

EBITDA margin went from 57.8% in 3Q23 to 54.8% in 3Q24. Excluding the effects of IFRIC-12, EBITDA margin went from 67.5% in 3Q23 to 67.0% in 3Q24. The nominal value of EBITDA increased by Ps. 237.8 million, or 5.6%, compared to 3Q23.

Financial results increased by Ps. 515.8 million, or 94.8%, from a net expense of Ps. 544.1 million in 3Q23 to a net expense of Ps. 1,060.0 million in 3Q24. This change was mainly the result of:

• Foreign exchange rate fluctuations, which went from an income of Ps. 170.2 million in 3Q23 to an expense of Ps. 313.4 million in 3Q24. This generated a foreign exchange loss of Ps. 483.7 million. This was mainly due to the depreciation of the peso. Currency translation effect gain increased Ps. 493.0 million, compared to 3Q23.
• Interest expenses increased by Ps. 25.2 million, or 2.2%, compared to 3Q23, mainly due to higher debt as a result of the issuance of long-term debt securities and the drawdown of credit lines, as well as the substantial increase in the interest rates.
• Interest income decreased by Ps. 6.9 million, or 2.1%, compared to 3Q23, mainly due to a decrease in the cash and cash equivalents average balance and the reference rates.

In 3Q24, comprehensive income increased by Ps. 69.1 million, or 2.7%, compared to 3Q23. Income before income taxes decreased by Ps. 445.6 million, mainly due to the decrease in passenger traffic and partially offset by the revenues generated by the commercial strategy and the consolidation of the cargo and free trade zone business. This decrease generated a decrease in the tax income of Ps. 49.5 million. Net and comprehensive income increased mainly due to the increase of the effect of foreign currency translation by Ps. 493.0 million.

During 3Q24, net income decreased by Ps. 396.0 million, or 16.6%, compared to 3Q23. Taxes for the period decreased by Ps. 49.5 million, tax income increased by Ps. 67.0 million and the benefit for deferred taxes increased by Ps. 116.5 million, mainly due to the application of fiscal losses for Ps. 97.9 million, and other deferred taxes by Ps. 20.7 million, offset by a decrease in the inflationary effects, that went from an inflation rate of 1.5% in 3Q23 to 1.4% in 3Q24.

Consolidated Results for the Nine Months of 2024 (in thousands of pesos):

^{– Net income and comprehensive income per share for 9M24 and 9M23 were calculated based on 505,277,464 shares outstanding as of September 30, 2024, and September 30, 2023. U.S. dollar figures presented were converted from pesos to U.S. dollars at a rate of Ps. 19.6903 per U.S. dollar (the noon buying rate on September 30, 2024, as published by the U.S. Federal Reserve Board).
– For purposes of the consolidation of the airports in Jamaica, the average nine-month exchange rate of Ps. 17.7104 per U.S. dollar for the nine months ended September 30, 2024, was used.}

Revenues (9M24 vs. 9M23)

• Aeronautical services revenues decreased by Ps. 630.0 million, or 4.3%.
• Non-aeronautical services revenues increased by Ps. 976.8 million, or 21.5%.
• Revenues from improvements to concession assets decreased by Ps. 452.6 million, or 9.5%.
• Total revenues decreased by Ps. 105.9 million, or 0.4%.
  

• The change in aeronautical services revenues was composed primarily of the following factors:
  1. Revenues at our Mexican airports decreased by Ps. 700.4 million, or 5.5%, compared to 9M23, mainly due to the 3.4% decrease in passenger traffic, as well as 93.4% compliance with the maximum tariffs.
  2. Revenues from Jamaican airports increased by Ps. 70.4 million, or 3.3%, compared to 9M23. This was mainly due to the increase in revenues in U.S. dollars by US$4.8 million, or 4.0%. This was offset by an appreciation of the peso against the dollar compared to 9M23 of 0.7%, which went from an average exchange rate of Ps. 17.8282 in 9M23 to Ps. 17.7104 in 9M24, which represented a decrease in revenues in pesos. Passenger traffic decreased by 1.5%.

• The change in non-aeronautical services revenues was composed primarily of the following factors :
  1. Revenues at our Mexican airports increased by Ps. 968.4 million, or 25.6%, compared to 9M23. Revenues from businesses operated directly by us increased by Ps. 612.9 million, or 48.5%, mainly due to the consolidation of the cargo and free trade zone business starting in July 2024 with revenues of Ps. 354.1 million, while the recovery of costs increased by Ps. 4.5 million, or 3.5%. Revenues from businesses operated by third parties increased by Ps. 350.9 million, or 14.7%. This was mainly due to the opening of new commercial spaces, and the renegotiation of existing contracts. The business lines that increased the most were car rentals, food and beverage, other commercial revenues, and retail, which jointly increased by Ps. 357.8 million, or 18.2%.
  2. Revenues from the Jamaican airports increased by Ps. 8.4 million, or 1.1%, compared to 9M23, mainly due to the increase in revenues in USD dollars by US$0.7 million or 1.8%, this was offset by an appreciation of the peso against the dollar compared to 9M23 of 0.7%.

^{Figures are expressed in thousands of Mexican pesos.}

• Revenues from improvements to concession assets²
  Revenues from improvements to concession assets (IFRIC12) decreased by Ps. 452.6 million, or 9.5%, compared to 9M23. The change was composed primarily of:
  1. The Company’s Mexican airports decreased by Ps. 672.3 million, or 14.4%, following the investments under the Master Development Program for the 2020-2024 period.
  2. Improvements to concession assets at the Company’s Jamaican airports increased by Ps. 219.7 million, or 258.7%.

________________________
_{[2] Revenues from improvements to concession assets are recognized in accordance with International Financial Reporting Interpretation Committee 12 “Service Concession Arrangements” (IFRIC 12), but this recognition does not have a cash impact or an impact on the Company’s operating results. Amounts included as a result of the recognition of IFRIC 12 are related to construction of infrastructure in each quarter to which the Company has committed in accordance with the Company’s Master Development Programs in Mexico and Capital Development Program in Jamaica. All margins and ratios calculated using “Total Revenues” include revenues from improvements to concession assets (IFRIC 12), and, consequently, such margins and ratios may not be comparable to other ratios and margins, such as EBITDA margin, operating margin or other similar ratios that are calculated based on those results of the Company that do have a cash impact.}

Total operating costs increased by Ps. 360.8 million, or 2.9%, compared to 9M23, mainly due to a Ps. 536.5 million, or 16.8%, increase in the cost of services, a Ps. 278.6 million, or 15.0%, increase in depreciation and amortization, and a combined increase in concession taxes and technical assistance fees by Ps. 28.6 million, or 1.1%. This was offset by the decrease in improvements to concession assets (IFRIC12) by Ps. 452.6 million, or 9.5% (excluding the cost of improvements to concession assets, operating costs increased Ps. 813.5 million, or 10.6%).

This increase in total operating costs was composed primarily of the following factors:

Mexican Airports:

• Operating costs increased by Ps. 102.9 million, or 1.0%, compared to 9M23, primarily due to a Ps.454.5, or 17.2%, increase in the cost of services, a combined Ps. 279.7 million, or 18.9%, increase in depreciation and amortization, and a combined Ps. 68.5 million, or 4.8%, increase in technical assistance fees and concession taxes. This was offset by a Ps. 672.4 million, or 14.4%, decrease in the cost of improvements to the concession assets (IFRIC-12). (excluding the cost of improvements to the concession assets, operating costs increased by Ps. 775.3 million or 14.0%).

The change in the cost of services during 9M24 was mainly due to:

• Employee costs increased by Ps. 237.7 million, or 21.2%, compared to 9M23, mainly due to the adjustments in salaries and changes in Labor Law and the consolidation of the cargo and free trade zone business with employee costs of Ps. 86.5 million.
• Other operating expenses increased by Ps. 72.4 million, or 14.4%, compared to 9M23, mainly due to a combined increase in services, professional fees, and travel expenses by Ps. 41.0 million and the consolidation of the cargo and free trade zone business with other operating expenses of Ps. 12.4 million.
• Maintenance increased by Ps. 61.0 million, or 16.1%, compared to 9M23.
• Safety, security, and insurance costs increased Ps. 60.4 million, or 15.6%, compared to 9M23, mainly due to an increase in the number of security staff, an increase in minimum wages, changes in Labor Law, the opening of additional operational areas and the consolidation of the cargo and free trade zone business by Ps.4.8 million.

Jamaican Airports:

• Operating costs increased by Ps. 257.9 million, or 11.8%, compared to 9M23, mainly due to a Ps. 219.7 million, or 258.7%, increase in the cost of improvements to concession assets (IFRIC-12), a Ps. 82.0 million, or 15.0% increase in the cost of services, offset by the decrease in concession taxes by Ps. 39.9 million, or 3.4%, and Ps. 1.1 million or 0.3% in depreciation and amortization.

Operating margin went from 48.5% in 9M23 to 46.8% in 9M24. Excluding the effects of IFRIC-12, the operating margin went from 60.5% in 9M23 to 57.0% in 9M24. Operating income decreased Ps. 466.7 million, or 4.0%, compared to 9M23.

EBITDA margin went from 56.2% in 9M23 to 55.7% in 9M24. Excluding the effects of IFRIC-12, EBITDA margin went from 70.1% in 9M23 to 67.9% in 9M24. The nominal value of EBITDA decreased Ps. 188.1 million, or 1.4%, compared to 9M23.

Financial cost increased by Ps. 590.3 million, or 34.2%, from a net expense of Ps. 1,726.6 million in 9M23 to a net expense of Ps. 2,316.9 million in 9M24. This change was mainly the result of:

• Foreign exchange rate fluctuations, which went from a loss of Ps. 186.3 million in 9M23 to a loss of Ps.203.6 million in 9M24. This generated an increase in the foreign exchange loss of Ps. 17.3 million, due to the peso depreciation. Currency translation effect gain increased Ps. 1,675.4 million, compared to 9M23.
• Interest expenses increased by Ps. 364.4 million, or 13.8%, compared to 9M23, mainly due to the increase in debt due to the issuance of bond certificates and the contracting of bank loans.
• Interest income decreased by Ps. 208.4 million, or 18.9%, compared to 9M23, mainly due to a decrease in the cash and cash equivalent average balance and the increase in the reference interest rates.

In 9M24, comprehensive income increased by Ps. 925.2 million, or 13.7%, compared to 9M23. Income before taxes decreased by Ps. 1,056.9 million, mainly due to the decrease in passenger traffic and increase in operating costs, offset by the increase in non-aeronautical revenues resulting from the commercial strategy and the consolidation of the cargo and free trade zone business. Income taxes decreased by Ps. 330.7 million. However, net and comprehensive income increased mainly due to the increase of the effect of foreign currency translation in Ps. 1,675.4 million.

During 9M24, net income decreased by Ps. 726.3 million, or 9.8%, compared to 9M23. Taxes for the period decreased by Ps. 330.7 million, mainly due to the increase in the benefit for deferred taxes by Ps. 431.3 million, mainly due to the application of fiscal losses by Ps. 445.0 million, offset by the increase in the income taxes by Ps. 100.6 million.

Statement of Financial Position

Total assets as of September 30, 2024, increased by Ps. 10,630.1 million compared to September 30, 2023, primarily due to the following items: (i) a Ps.6,157.0 million increase in net improvements to concession assets, (ii) a Ps. 1,373.9 increase in cash and cash equivalents, (iii) Ps. 881.0 million increase in deferred taxes, (iii) a Ps. 727.4 million increase in net machinery, equipment, and leasehold improvements, and (v) a Ps. 308.0 million increase in account receivables.

Total liabilities as of September 30, 2024, increased by Ps. 8,192.6 million compared to September 30, 2023. This increase was primarily due to the following items: (i) Ps. 6,148.1 million in long-term bond certificates, (ii) Ps. 915.1 million in bank loans, and (iii) Ps. 446.6 million increase in income taxes.

Recent events

The financial information presented in 3Q24 consolidates, as of July 1, 2024, the figures of the cargo and free trade zone business at the Guadalajara airport that increases non-aeronautical revenues by Ps. 354.1 million, with an EBITDA margin of 58.1% and a treasury of Ps. 254.6 million, without financial debt.

Company Description

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (GAP) operates 12 airports throughout Mexico’s Pacific region, including the major cities of Guadalajara and Tijuana, the four tourist destinations of Puerto Vallarta, Los Cabos, La Paz and Manzanillo, and six other mid-sized cities: Hermosillo, Guanajuato, Morelia, Aguascalientes, Mexicali and Los Mochis. In February 2006, GAP’s shares were listed on the New York Stock Exchange under the ticker symbol “PAC” and on the Mexican Stock Exchange under the ticker symbol “GAP”. In April 2015, GAP acquired 100% of Desarrollo de Concesiones Aeroportuarias, S.L., which owns a majority stake in MBJ Airports Limited, a company operating Sangster International Airport in Montego Bay, Jamaica. In October 2018, GAP entered into a concession agreement for the operation of Norman Manley International Airport in Kingston, Jamaica, and took control of the operation in October 2019.

In accordance with Section 806 of the Sarbanes-Oxley Act of 2002 and Article 42 of the “Ley del Mercado de Valores”, GAP has implemented a “whistleblower” program, which allows complainants to anonymously and confidentially report suspected activities that involve criminal conduct or violations. The telephone number in Mexico, facilitated by a third party responsible for collecting these complaints, is 800 04 ETICA (38422) or WhatsApp +52 55 6538 5504. The website is www.lineadedenunciagap.com or by email at denuncia@lineadedenunciagap.com. GAP’s Audit Committee will be notified of all complaints for immediate investigation.

Exhibit A: Operating results by airport (in thousands of pesos):

Exhibit A: Operating results by airport (in thousands of pesos):

^{(1)   Others include the operating results of the Aguascalientes, La Paz, Los Mochis, Manzanillo, Mexicali, Morelia, and Kingston airports.}

Exhibit B: Consolidated statement of financial position as of September 30 (in thousands of pesos):

^{The non-controlling interest corresponds to the 25.5% stake held in the Montego Bay airport by Vantage Airport Group Limited (“Vantage”).}

Exhibit C: Consolidated statement of cash flows (in thousands of pesos):

Exhibit D: Consolidated statements of profit or loss and other comprehensive income (in thousands of pesos):

^{The non-controlling interest corresponds to the 25.5% stake held in the Montego Bay airport by Vantage Airport Group Limited (“Vantage”).}

Exhibit E: Consolidated stockholders’ equity (in thousands of pesos):

^{For presentation purposes, the 25.5% stake in Desarrollo de Concesiones Aeroportuarias, S.L. (“DCA”) held by Vantage appears in the Stockholders’ Equity of the Company as a non-controlling interest.}

As a part of the adoption of IFRS, the effects of inflation on common stock recognized under Mexican Financial Reporting Standards (MFRS) through December 31, 2007, were reclassified as retained earnings because accumulated inflation recognized under MFRS is not considered hyperinflationary according to IFRS. For Mexican legal and tax purposes, Grupo Aeroportuario del Pacífico, S.A.B. de C.V., as an individual entity, will continue preparing separate financial information under MFRS. Therefore, for any transaction between the Company and its shareholders related to stockholders’ equity, the Company must take into consideration the accounting balances prepared under MFRS as an individual entity and determine the tax impact under tax laws applicable in Mexico, which requires the use of MFRS. For purposes of reporting to stock exchanges, the consolidated financial statements will continue to be prepared following IFRS, as issued by the IASB.

Exhibit F: Other operating data:

^{WLU = Workload units represent passenger traffic plus cargo units (1 cargo unit = 100 kilograms of cargo).}

Contact:
Media - 
Aidan Gormley - Director, Global Communications and Branding
216-896-3258
aidan.gormley@parker.com

Financial Analysts -
Jeff Miller - Vice President, Investor Relations
216-896-2708
jeffrey.miller@parker.com

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BAKERSFIELD, Calif., Oct. 21, 2024 /PRNewswire/ — Mission Bancorp (“Mission” or the “Company”) MSBC, a bank holding company and parent of Mission Bank (the “Bank”), reported unaudited net income available to common shareholders of $7.8 million, or $2.93 per diluted common share, for the third quarter of 2024, compared to net income available to common shareholders of $8.0 million, or $3.01 per diluted common share, for the third quarter of 2023, and net income available to common shareholders of $7.3 million, or $2.73 per diluted common share, for the linked quarter.

“In a time when many of our competitors face shrinking deposit balances and limited growth, the team at Mission Bank is countering the industry trend. On the deposit side we have seen double digit annualized growth for the past two periods, including 33% annualized growth in the 3rd quarter, despite the challenging rate environment.  With change predicted for the future, it is our goal to maintain our positive trajectory and we will do that by nurturing the strong client relationships that have helped us reach these impressive heights.” said AJ Antongiovanni, President, and Chief Executive Officer of Mission Bancorp. “We are reporting strong earnings of $7.8 million, an increase of $0.6 million sequentially. These figures are the result of the hard work and determination of our entire team, including our SBA division who has already achieved a record setting year, boosting non-interest income, and supporting our Q3 earnings growth.” 

Third Quarter 2024 Financial Highlights

• Gross loans increased by $84.5 million, or 7.3%, to $1.24 billion as of September 30, 2024, compared to $1.16 billion at September 30, 2023, and increased by 1.0%, or $12.9 million, compared to June 30, 2024, balances.
• Total deposits increased by $202.1 million, or 14.4%, to $1.61 billion as of September 30, 2024, compared with $1.41 billion a year earlier, and increased by $123.1 million, or 8.3%, from $1.48 billion as of June 30, 2024. Noninterest-bearing deposits were $627.4 million and represent 39.0% of total deposits at September 30, 2024.
• The allowance for credit losses (“ACL”) as a percentage of gross loans was 1.53% as of September 30, 2024, unchanged compared to September 30, 2023.
• Credit quality remains strong with nonaccrual loans representing 0.03% of total gross loans at September 30, 2024, up from 0.00% as of September 30, 2023.
• The Community Bank Leverage Ratio for the Bank as of September 30, 2024, was 11.41%, compared to 11.05% at September 30, 2023.

Net Income Available to Common Shareholders

Net income available to common shareholders for the third quarter of 2024 was $7.8 million, or $2.93 per diluted common share, compared with $7.3 million, or $2.73 per diluted common share, for the linked quarter ended June 30, 2024. Net income available to common shareholders was $8.0 million, or $3.01 per diluted common share, for the third quarter of 2024. Net income available to common shareholders increased $0.6 million, or 7.7%, compared to the linked quarter, and decreased $0.1 million, or 1.6%, compared to the same prior year period.

Notable variances comparing to the linked quarter include an increase in non-interest income and net interest income, which were partially offset by an increase in the provision for credit losses, the provision for income taxes, and non-interest expense. Compared to the third quarter of 2023, increases in non-interest expense and the provision for credit losses were partially offset by increases in non-interest income and net interest income.

Net Interest Income

Net interest income was $18.2 million, or 4.31%, of average earning assets (“net interest margin”), for the third quarter of 2024, compared with $17.9 million, or a net interest margin of 4.67%, for the same period a year earlier, and $17.5 million, or a net interest margin of 4.47%, for the quarter ended June 30, 2024.

Net interest income increased by $0.3 million, or 1.6%, compared to the same prior year period, primarily driven by growth in the Company’s loan portfolio and interest-earning deposits in other banks, coupled with an increase in yields on earning assets. Loan interest income and fee accretion increased by $2.2 million compared to the third quarter of 2023. Additionally, the Company also experienced increased interest income from interest earning deposits in other banks of $1.2 million. Offsetting these increases, interest expense for the current quarter increased $3.2 million, compared to the same prior year period, primarily due to increased balances and costs of interest-bearing deposits, net of decreased costs associated with other borrowings.

Net interest income increased for the quarter ended September 30, 2024, compared to the linked quarter by $0.7 million, or 4.0%, due primarily to an increase in interest income on earning assets which were partially offset by an increase in interest expense on deposits. Interest income increased $2.0 million, for the current quarter, compared to the linked quarter, primarily due to average balance growth on interest earning deposits in other banks and loans. Interest expense on deposits increased $1.4 million, for the current quarter, compared to the linked quarter, due to higher average balances and increased costs on interest bearing deposits. Interest on other borrowings decreased by $0.1 million during the current quarter due to the maturity of a one-year term borrowing facility.

The net interest margin was 4.31% for the quarter ended September 30, 2024, compared to 4.67% for the same prior year period, and 4.47% for the linked quarter ended June 30, 2024. During the past year, asset yields have increased 29 basis points, but the cost of funds has risen 72 basis points, contributing to the 36 basis point decline in the quarterly net interest margin. Additionally, average interest-bearing liabilities have grown $172.5 million, outpacing the growth in average interest-earning assets of $158.5 million, when compared to the same prior year period.

The 16 basis point decrease in the net interest margin for the third quarter of 2024, compared to the linked quarter, is primarily attributable to the 19 basis point increase in the Company’s cost of interest-bearing liabilities, outpacing the 2 basis point rise on earning asset yields, which led to net interest margin compression during the quarter. Compared to the linked quarter, the average balances of interest-bearing liabilities increased 11.9%, outpacing the growth in interest-earning assets of 6.8%.

The yield on loans, interest earning deposits in other banks, and investment securities, have increased by 29 basis points to 6.55%, 15 basis points to 5.45%, and 31 basis points to 4.32%, respectively, compared to the same prior year period. Additionally, average balances on loans increased $86.0 million, or 7.42%, average balances on interest earning deposits in other banks increased $85.9 million, or 80.7%, and average balances on investment securities declined $13.6 million, or 5.48%, compared to the same prior year period. The cost of interest-bearing deposits increased 103 basis points to 3.12%, while the average balances of interest-bearing deposits increased $192.4 million, compared to the same period last year.

The yield on loans, interest earning deposits in other banks, and investment securities, increased by 5 basis points to 6.55%, 8 basis points to 5.45%, and 13 basis points to 4.32%, respectively, for the quarter ended September 30, 2024, compared to the linked quarter. Additionally, average balances on loans increased $20.8 million, or 1.7%, average balances on interest earning deposits in other banks increased $88.5 million, or 85.2%, and average balances on investment securities declined $2.0 million, or 0.8%, compared to the linked quarter. The cost of interest-bearing deposits increased 21 basis points to 3.12%, while the average balances on interest-bearing deposits increased $108.5 million, compared to the linked quarter.

The cost of funds was 1.93% for the quarter ended September 30, 2024, an increase of 72 basis points compared to 1.21%, for the same prior year period, and an increase of 20 basis points compared to 1.73%, for the linked quarter ended June 30, 2024. The increase in the Company’s cost of funds is attributable to the higher short term rate environment and increased competition for deposits in general. The Bank has continued to grow its total deposit accounts through new customer acquisition and expansion of existing relationships over the last year, however, our clients have also continued to optimize the proportion of operating account balances versus interest-bearing balances, leading to a decline in the percentage of non-interest-bearing deposits of total deposits and increase the cost of deposits. However, Mission continues to outperform peers by achieving lower deposit costs than peer averages. Compared to a peer group consisting of all California Commercial Banks from S&P Capital IQ as of June 30, 2024, Mission’s cost of funds for the second quarter of 2024, was 54 basis points lower than the 2.27% peer average.

For the nine months ended September 30, 2024, the Company’s net interest income increased $1.6 million to $53.4 million, while the net interest margin decreased 27 basis points to 4.44%, compared to net interest income of $51.8 million and net interest margin of 4.71%, for the nine months ended September 30, 2023. The decline in net interest margin is the result of a 113 basis point increase in the cost of total interest-bearing liabilities and $159.0 million growth in average interest-bearing liability balances, which outpaced the 47 basis point increase in earning asset yields and the $134.6 million growth in average earning asset balances.

In the third quarter of 2023 the Company entered into two pay-fixed, receive floating, interest rate swap contracts with notional balances totaling $108.0 million, to hedge future interest rate increases on a portion of its fixed rate loan and investment securities portfolios. For the current quarter ending on September 30, 2024, the linked quarter and the third quarter of 2023, the interest rate swap contract associated with the loan portfolio generated an additional $0.1 million in interest income. For the current quarter ending on September 30, 2024, the linked quarter and the third quarter of 2023, the interest rate swap contract associated with the investment securities portfolio generated an additional $0.2 million in interest income. The interest rate swap contracts on the loan and investment securities portfolios generated $0.4 million total of additional interest income and 10 basis points of additional earning asset yield during the quarter ended September 30, 2024, compared to $0.3 million total additional interest income and 7 basis points of additional earning asset yield for the same prior year period.

Provision for Credit Losses

A $0.4 million provision for credit losses was recorded for the quarter ended September 30, 2024, compared to no provision for the linked quarter, and $0.2 million for the same period a year ago. The Company’s quarterly credit loss provisions over the past year have been recorded primarily to account for growth in the loan portfolio and changes in macro-economic conditions which impact the calculated ACL under the current expected credit loss (“CECL”) model, rather than in response to changing conditions in the Company’s loan portfolio, which have remained stable, demonstrating a low credit risk profile during the past twelve months.

Non-Interest Income

Non-interest income increased $0.9 million, or 57.8%, to $2.5 million for the quarter ended September 30, 2024, compared to $1.6 million in the linked quarter, and increased by $1.0 million, or 71.3%, compared to $1.4 million for the same period a year earlier. Notable variances when compared to the linked quarter were increases in SBA servicing fees and gain on sale of loans and service charges, fees, and other income. The increase in non-interest income when compared to the same prior year period was primarily due to increases in SBA servicing fees and gain on sale of loans.

Non-Interest Expense

Non-interest expense increased by $0.2 million, or 2.4%, to $9.2 million for the quarter ended September 30, 2024, compared to $9.0 million for the linked quarter, and increased by $1.3 million, or 16.5%, compared to $7.9 million for the quarter ended September 30, 2023.

The increase in non-interest expense for the third quarter of 2024 compared to the linked quarter was primarily due to a $0.2 million increase in professional services expense.

The increase in non-interest expense for the third quarter of 2024 compared to the third quarter of 2023 was primarily due to a $0.8 million increase in salaries and benefits expense attributable to new hires, net of terminations, increased base compensation, and increased incentive compensation accruals, a $0.3 million increase in professional services expense, and a $0.2 million increase in other expenses.

Operating Efficiency

The Company’s operating efficiency ratio increased to 44.7% for the third quarter of 2024, compared to 40.9% for the third quarter of 2023, and decreased from 47.3% compared to the linked quarter. Total non-interest expense as a percentage of average assets, another measure of the Company’s efficiency, was 2.08% for the third quarter of 2024, compared to 1.95% for the third quarter of 2023, and 2.19% for the quarter ended June 30, 2024.

Income Taxes

Income tax expense was $3.2 million for the third quarter of 2024, compared to $3.3 million for the quarter ended September 30, 2023, and $2.8 million for the linked quarter ended June 30, 2024. The Company’s effective tax rate for the third quarter of 2024 was 28.9%, compared to 29.1% for the same period a year ago, and 27.5% for the quarter ended June 30, 2024. 

Asset and Equity Returns

The return on average equity for the third quarter of 2024 was 17.4%, down from 22.1% for the same prior year period, and relatively unchanged when compared to the linked quarter. The quarterly return on average assets for the third quarter of 2024 was 1.77%, down from 1.97% for the same prior year period, and unchanged when compared to the linked quarter.

The decline in the quarterly returns on both average equity and average assets for the quarter ended September 30, 2024, compared to the third quarter of 2023, is primarily attributable to the 25.2% growth in average equity and the 9.61% growth in average assets, coupled with a 1.64% decline in quarterly net income.

The return on average equity and the return on average assets for the third quarter of 2024 was consistent with the linked quarter, as net income growth marginally outpaced the growth in quarterly average equity and quarterly average assets. Net income increased 7.69% compared to the linked quarter, while average equity and average asset growth were 6.05% and 6.54%, respectively.

Balance Sheet

Total assets increased by $215.6 million, or 13.4%, to $1.83 billion at September 30, 2024, compared to September 30, 2023, and increased by $137.0 million, or 8.1%, compared to June 30, 2024. Cash and cash equivalents increased by $138.1 million, or 82.6%, to $305.3 million at September 30, 2024, compared to the same prior year period, and increased by $127.4 million, or 71.7%, compared to June 30, 2024. The significant increase in the Company’s cash position over the last year is primarily the result of deposit growth, net of the Federal Reserve Bank borrowing facility repayment upon maturity, and earnings, which outpaced loan portfolio growth. The increase in the Company’s cash position over the past quarter is primarily due to robust deposit growth, which outpaced loan portfolio growth for the quarter.

Investment securities decreased by $3.9 million or 1.7%, to $234.1 million at September 30, 2024, compared to $238.1 million at September 30, 2023, and were relatively unchanged compared to June 30, 2024. The decrease in the investment securities portfolio over the past year is attributable to repayments and amortization of the bond portfolio, net of decreased unrealized losses on the investment securities portfolio attributable to market rate changes during the last year.

Loans increased by $84.5 million, or 7.3%, to $1.24 billion at September 30, 2024, compared to September 30, 2023, and increased by $12.9 million, or 1.0%, compared to June 30, 2024. Loan growth during the last year has been diversified across the portfolio, with notable growth in owner and non-owner occupied commercial real estate, construction and land development, and agricultural production segments of the loan portfolio, which were partially offset by the contraction in loans secured by farmland. Loan growth during the last quarter has been concentrated in owner occupied commercial real estate, multi-family, and construction and land development segments of the loan portfolio, which were partially offset by decreases in agricultural production loans and non-owner occupied commercial real estate loans.

Total deposits increased by $202.1 million, or 14.4%, to $1.61 billion as of September 30, 2024, from $1.41 billion as of September 30, 2023, and increased by $123.1 million, or 8.3%, from $1.48 billion at June 30, 2024. Noninterest-bearing deposits decreased by $28.1 million, or 4.3%, during the last year, and increased by $8.1 million, or 1.3%, since June 30, 2024. The decrease in noninterest bearing deposits experienced over the last year is attributable to both cash utilization by business customers as well as the migration of funds to interest-bearing accounts for yield. Noninterest-bearing deposits represented 39.0% of total deposits on September 30, 2024.

Total shareholders’ equity was $184.8 million at September 30, 2024, an increase of $40.1 million, or 27.7%, compared to September 30, 2023, and an increase of $11.2 million, or 8.1%, compared to June 30, 2024, due primarily to quarterly earnings, net of changes in accumulated other comprehensive income or loss. The accumulated other comprehensive loss component of equity decreased $3.0 million during the past quarter due to a $4.3 million decrease in the accumulated other comprehensive loss on the investment securities portfolio, partially offset by a $1.3 million increase in the accumulated other comprehensive loss associated with the interest rate swap contract, which is a hedge on interest rates of the investment securities portfolio. The accumulated other comprehensive loss decreased by $7.9 million during the past year resulting from a $9.7 million decrease in the accumulated other comprehensive loss on the investment securities portfolio, partially offset by a $1.8 million increase in the accumulated other comprehensive loss associated with the interest rate swap contract. The decline in accumulated other comprehensive loss is the result of an increase in the fair market value of our securities portfolio attributable to the decline in interest rates and not related to credit quality.

Nonperforming assets were $0.4 million at September 30, 2024, down from $0.5 million at June 30, 2024, and up from $0 at September 30, 2023. Nonperforming assets as a percentage of total assets were 0.02% at September 30, 2024, down from 0.03% at June 30, 2024, and up from 0.00% at September 30, 2023. Non-accrual loans currently recorded have 100% of their balances individually reserved for with allowances for credit losses.

Allowance for Credit Losses

The allowance for credit losses (“ACL”) as a percentage of gross loans increased to 1.53% at September 30, 2024, from 1.52% at June 30, 2024, and was unchanged from September 30, 2023. The relatively unchanged ACL as a percentage of gross loans over the last twelve months reflects the credit quality strength of the loan portfolio and prudent management amid ongoing economic uncertainties stemming from sustain inflationary pressures and elevated rates.

Regulatory Capital

The Bank’s reported regulatory capital ratio exceeded the ratio generally required to be considered a “well capitalized” financial institution for regulatory purposes. The Community Bank Leverage Ratio for the Bank was 11.41%, at September 30, 2024, compared with the requirement of 9.00% to generally be considered a “well capitalized” financial institution for regulatory purposes. The Bank’s Community Bank Leverage ratio has increased by 36 basis points from 11.05%, and decreased by 40 basis points from 11.81%, as of the periods ended September 30, 2023, and June 30, 2024, respectively. Strong earnings over the past year outpaced the growth in average assets, resulting in an increase in regulatory capital ratios; while earnings have remained strong during the current quarter, the growth in average assets, coupled with dividends paid to the Company during 2024, have resulted in a decrease in regulatory capital ratios compared to the linked quarter.

Stock Repurchase Program

The Company announced on April 29, 2024, the extension of its plan Rule 10b5-1 (the “2022 10b5-1 Plan”) to facilitate the repurchase of its common stock. Pursuant to the 2022 10b5-1 Plan, a maximum of $1.0 million of the Company’s common stock may be repurchased by the Company. The previous extension under the Plan expired on April 26, 2024, and the Company extended the Plan for an additional six months, through October 25, 2024. The Company may suspend or discontinue the Plan at any time. Hilltop Securities, Inc. is acting as the Company’s agent to purchase its shares on pre-arranged terms pursuant to the 2022 10b5-1 Plan.

During the third quarter of 2024 the Company repurchased 1,615 shares under the 2022 10b5-1 Plan at an average price of $86.39. Since Plan inception the Company has repurchased 5,681 shares at an average price of $83.69.

About Mission Bancorp and Mission Bank

With $1.8 billion in assets, Mission Bancorp is headquartered in Bakersfield, California and is the holding company of four wholly owned subsidiaries, Mission Bank, Mission 1031 Exchange, LLC, Mission Community Development, LLC, and Nosbig 88, Inc. Mission Bank has eight Business Banking Centers, serving the greater areas of Bakersfield, Lancaster, San Luis Obispo, Stockton, Ventura, and Visalia, California. Visit Mission Bank online at www.missionbank.bank. By including the foregoing website address, Mission Bancorp does not intend to, and shall not be deemed to incorporate by reference any material contained therein.

Forward Looking Statements

This press release may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties may include but are not necessarily limited to fluctuations in interest rates, inflation, rapid and/or unanticipated deposit withdrawals, the unavailability of sources of liquidity, additional regulatory requirements that may be imposed on community banks or banks in general, general and industry-specific changes in market conditions, investor reaction to industry developments, government regulations and general economic conditions, and competition within the business areas in which the bank is conducting its operations, including the real estate market in California and other factors beyond the bank’s control. Such risks and uncertainties could cause results for subsequent interim periods or for the entire year to differ materially from those indicated. Readers should not place undue reliance on the forward-looking statements, which reflect management’s view only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.