LOS ANGELES--(BUSINESS WIRE)--Pacific Commerce Bancorp (OTC Pink: PCBC) (the “Company”), parent company of Pacific Commerce Bank (the “Bank”), reported net income of $4,228,000, or $0.46 per diluted share for, the nine months ended September 30, 2017. Earnings for the third quarter equaled $1,420,000, or $0.15 per diluted share, compared to $1,410,000, or $0.15 per diluted share in the second quarter and $1,286,000, or $0.14 per diluted share in the third quarter of 2016.
FINANCIAL HIGHLIGHTS FOR THE QUARTER
- The return on average assets (ROAA) for the nine months and the quarter equaled 1.07% and 1.07%, respectively.
- The return on average equity (ROAE) for the nine months and the quarter equaled 9.22% and 8.95%, respectively.
- The efficiency ratio for the nine months and the quarter were 62.0% and 61.1%, respectively.
- Tangible book value per share increased to $6.00.
- Total noninterest bearing demand deposits equaled 50.3% of total deposits and total non-maturity deposits equaled 81.4% of total deposits.
For the first nine months of 2017, the Company’s earnings increased 95.3%, to $4,228,000, or $0.46 per diluted share, compared to $2,165,000, or $0.23 per diluted share, for the first nine months of 2016. Adjusted for nonrecurring merger related expenses, core earnings for the 2016 period totaled $2,797,000, or $0.36 per diluted share.
For the quarter ended September 30, 2017, the Company earned $1,420,000, or $0.15 per diluted share, compared to $1,410,000, or $0.15 per diluted share, in the second quarter of 2017. The Company earned $1,286,000, or $0.14 per diluted share for the three months ended September 30, 2016.
Chief Executive Officer, Frank Mercardante said, “We remain focused on our core banking operation, which is to meet the banking needs of small businesses in the communities we serve. Our staff of professionals continue to do a great job in promoting the Bank and its services and we are pleased with the outcome.”
INCOME STATEMENT
For the nine months ended September 30, 2017 net interest income totaled $16,958,000 compared to $14,418,000 for the nine months of 2016. Average total earning assets in the current period equaled $503.0 million at a yield of 4.81%, compared to average earning assets totaling $437.8 million at a yield of 4.69% for the same period in 2016. Net interest income was positively impacted by purchase accounting accretion in the first nine months of 2017 by $306,000, compared to $519,000 for the first nine months of 2016.
Net interest income totaled $5,743,000 in the third quarter of 2017, compared to $5,562,000 in the second quarter of 2017. Net interest income in the third quarter of 2016 equaled $5,944,000. Net interest income was positively impacted by purchase accounting accretion in each of the periods totaling $78,000 in the third quarter of 2017, $91,000 in the second quarter of 2017 and $398,000 in the 2016 third quarter.
The net interest margin for the first nine months of 2017, exclusive of the impact of purchase accounting accretion, equaled 4.43%, compared to 4.37% for the first nine months of 2016. Exclusive of the impact of purchase accounting accretion, the net interest margin in the 2017 third quarter equaled 4.49%, compared to 4.30%, in the second quarter of 2017 and 4.55% in the third quarter of 2016.
The yield on average interest bearing assets, exclusive of the impact of purchase accounting accretion equaled 4.81% in the third quarter of 2017, compared to 4.60%, in the second quarter of 2017 and 4.86% in the third quarter of 2016. The cost of interest bearing deposits for the current quarter, exclusive of purchase accounting accretion, equaled 56 basis points, compared with 51 basis points in the second quarter of 2017 and 47 basis points in the third quarter of 2016. The purchase accounting accretion benefit for the current quarter equaled 1 basis point, compared to 3 basis points in the prior quarter and 6 basis points in the third quarter of 2016.
The Company had average borrowings of $6 million in both the third and second quarter of 2017 with an average cost of 5.81% in the third quarter and 5.75% in the second quarter. This compares to average borrowings of $4.1 million in the third quarter of 2016 with an average cost of 5.51%. These borrowings are used to augment capital at the Company’s banking subsidiary, Pacific Commerce Bank.
Non-interest income in the third quarter of 2017 equaled $766,000, compared with $996,000 in the third quarter of 2016 and $833,000 in the second quarter of 2017. Non-interest expenses totaled $3,979,000 in the third quarter of 2017, compared to $4,505,000 in the third quarter of 2016 and $3,988,000 in the second quarter of 2017. The efficiency ratio for the current period was 61.1%, compared to 62.4% in the second quarter of 2017 and 64.9% in the third quarter of 2016.
The ROAA for the third quarter of 2017 was 1.07%, compared with 0.96% and 1.05% in the third quarter of 2016 and second quarter of 2017, respectively. The ROAE for the third quarter of 2017 equaled 8.95%, compared with 9.06% in the third quarter of 2016 and 9.23% in the second quarter of 2017, respectively.
CREDIT QUALITY
Credit quality remained unchanged in the most recent quarter and the current reserve for future losses was deemed adequate. Excluding $148.9 million in loans carried under purchase accounting rules which are held at a discount of 1.53% as of September 30, 2017, the allowance for loan and lease losses to total loans held for investment equaled 1.32% of loans outstanding. Total loans held for sale equaled $11.2 million at the end of the current quarter.
BALANCE SHEET
Total average assets and average interest-earning assets were $527.3 million and $501.4 million respectively at September 30, 2017. This compares with $533.0 million and $503.9 million respectively, at September 30, 2016, and $537.1 million and $510.5 million, respectively at June 30, 2017.
Average interest bearing liabilities as of September 30, 2017 totaled $235.8 million, compared with $288.1 million at September 30, 2016 and $245.4 million at June 30, 2017. Total non-maturity deposits increased to $380.3 million as of September 30, 2017, compared to $350.2 million at September 30, 2016 and $365.5 million at June 30, 2017. Total deposits were $467.0 million as of September 30, 2017, compared to $478.7 million at September 30, 2016 and $457.3 million at June 30, 2017.
REGULATORY CAPITAL
Shareholders’ equity at the Company as of September 30, 2017 equaled $63.5 million, compared to $56.9 million at September 30, 2016 and $61.9 million at June 30, 2017. Both the Company and Bank remained “Well-Capitalized” by regulatory definition at September 30, 2017 with capital ratios as follows:
|
Minimum |
||||||||||||
|
Required |
Company |
Bank |
||||||||||
| Tier 1 Leverage Ratio: | 4.00% | 10.24% | 11.23% | |||||||||
| Common Equity Tier 1 Capital Ratio: | 4.50% | 12.06% | 13.24% | |||||||||
| Tier 1 Capital Ratio: | 6.00% | 12.06% | 13.24% | |||||||||
| Total Capital Ratio: | 8.00% | 12.89% | 14.06% | |||||||||
About Pacific Commerce Bancorp
Pacific Commerce Bancorp is the parent company for Pacific Commerce Bank. Pacific Commerce Bank operates six full-service branches in Los Angeles and San Diego Counties, including its wholly owned division, ProAmérica Bank in Downtown Los Angeles. The Bank provides a complete array of deposit, treasury, cash management and loan banking solutions to small businesses, professionals and high net worth individuals from Los Angeles to the Mexico border. As a Preferred SBA Lender the Bank provides a full complement of lending solutions to small businesses throughout Southern California. Pacific Commerce Bancorp’s common stock is publicly traded on the Over the Counter Market under the ticker symbol “PCBC”. For more information please visit our website at www.pacificcommercebank.com.
Forward Looking Information
The financial information in this press release is based on unaudited financial results. Certain statements in this press release are "forward-looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements are subject to risks and uncertainties and therefore the Company's actual results may differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that the Company is subject to include, but are not limited to, risks related to the local and national economy, including fluctuations in interest rates and costs and changes in economic policy; the ability of the Company to perform in accordance with its plans; competition; regulatory matters; demand for loan products; deposit flows; its ability to develop and implement new technologies; and other factors. The Company cautions readers not to place undue reliance on any forward-looking statements. The Company does not undertake, and specifically disclaims any obligation, to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
|
Pacific Commerce Bancorp |
||||||||||||||||
|
Consolidated Selected Financial Data – Unaudited |
||||||||||||||||
|
(Amounts are in thousands, except for book value per share and shares outstanding data) |
||||||||||||||||
| BALANCE SHEETS | ||||||||||||||||
|
September 30, |
June 30, | September 30, | December 31, | |||||||||||||
|
2017 |
2017 |
2016 |
2016 |
|||||||||||||
| Assets | ||||||||||||||||
| Cash and due from banks | $ | 9,565 | $ | 8,005 | $ | 25,803 | $ | 25,664 | ||||||||
| Interest Bearing Deposits with Other Banks | 11,588 | 11,524 | 58,305 | 64,380 | ||||||||||||
| Federal Funds Sold | 70,102 | 77,009 | 3,000 | 3,000 | ||||||||||||
| Investment securities | - | 127 | 74 | |||||||||||||
| Mortgage Warehouse Loans Held for Sale | - | 1,092 | 1,696 | |||||||||||||
| Other Loans Held for Sale | 11,174 | 8,655 | 10,021 | 9,596 | ||||||||||||
| Loans, net of unearned income | 413,443 | 399,152 | 430,947 | 412,102 | ||||||||||||
| Less: Allowance for loan losses | (3,561 | ) | (3,459 | ) | (3,493 | ) | (3,436 | ) | ||||||||
| Net Loans | 421,056 | 404,348 | 438,567 | 419,958 | ||||||||||||
| Other assets | 26,099 | 26,050 | 26,347 | 26,484 | ||||||||||||
| Total Assets | $ | 538,410 | $ | 526,936 | $ | 552,149 | $ | 539,560 | ||||||||
|
Liabilities and Shareholders' Equity |
||||||||||||||||
| Demand deposits | $ | 234,796 | $ | 225,781 | $ | 196,058 | $ | 204,984 | ||||||||
| Non-maturity interest bearing deposits | 145,459 | 139,750 | 154,148 | 143,815 | ||||||||||||
| Time Deposits | 86,733 | 91,764 | 128,483 | 109,302 | ||||||||||||
| Total Deposits | 466,988 | 457,295 | 478,689 | 458,101 | ||||||||||||
| Borrowings | 5,937 | 5,956 | 13,943 | 20,906 | ||||||||||||
| Accrued interest and other liabilities | 1,985 | 1,811 | 2,577 | 1,925 | ||||||||||||
| Total Liabilities | 474,910 | 465,062 | 495,209 | 480,932 | ||||||||||||
| Shareholders' Equity | ||||||||||||||||
| Common stock | 57,628 | 57,422 | 56,822 | 56,984 | ||||||||||||
| Retained Earnings | 5,872 | 4,452 | 117 | 1,644 | ||||||||||||
| Other Comprehensive Income | - | - | 1 | - | ||||||||||||
| Total Shareholders' Equity | 63,500 | 61,874 | 56,940 | 58,628 | ||||||||||||
| Total Liabilities & Shareholders' Equity | $ | 538,410 | $ | 526,936 | $ | 552,149 | $ | 539,560 | ||||||||
| Book value per share at end of period | $ | 7.09 | $ | 6.92 | $ | 6.39 | $ | 6.58 | ||||||||
| Tangible Book Value per share at end of period | $ | 6.00 | $ | 5.82 | $ | 5.21 | $ | 5.46 | ||||||||
| Ending Shares outstanding | 8,951,285 | 8,940,689 | 8,912,269 | 8,912,269 | ||||||||||||
|
Pacific Commerce Bancorp |
|||||||||||||||||||||||||
|
Consolidated Selected Financial Data – Unaudited |
|||||||||||||||||||||||||
|
(Amounts are in thousands, except for book value per share and shares outstanding data) |
|||||||||||||||||||||||||
| STATEMENTS OF INCOME | |||||||||||||||||||||||||
|
For the Three Months Ended, |
For the Nine Months Ended, | ||||||||||||||||||||||||
|
September 30, 2017 |
June 30, 2017 |
September 30, 2016 |
September 30, 2017 |
September 30, 2016 |
|||||||||||||||||||||
| Total interest income | $ | 6,150 | $ | 5,938 | $ | 6,328 | $ | 18,083 | $ | 15,386 | |||||||||||||||
| Total interest expense | 407 | 376 | 384 | 1,125 | 968 | ||||||||||||||||||||
| Net interest income | 5,743 | 5,562 | 5,944 | 16,958 | 14,418 | ||||||||||||||||||||
| Provision for loan losses | 100 | 0 | 250 | 100 | 250 | ||||||||||||||||||||
| Total non-interest income | 766 | 833 | 996 | 2,286 | 2,304 | ||||||||||||||||||||
|
Non-Interest Expense
(Non-merger Related) |
3,979 | 3,988 | 4,505 | 11,924 | 11,442 | ||||||||||||||||||||
| Core earnings before Merger Related Expenses and Income Taxes | 2,430 | 2,407 | 2,185 | 7,220 | 5,030 | ||||||||||||||||||||
|
Non-Recurring
Merger Related Expenses |
- | - | - | - | 1,073 | ||||||||||||||||||||
| Income tax expense | 1,010 | 997 | 899 | 2,992 | 1,792 | ||||||||||||||||||||
| Net Income | $ | 1,420 | $ | 1,410 | $ | 1,286 | $ | 4,228 | $ | 2,165 | |||||||||||||||
| SELECTED FINANCIAL INFORMATION | |||||||||||||||||||||||||
| Basic earnings per share | $ | 0.16 | $ | 0.16 | $ | 0.14 | $ | 0.47 | $ | 0.24 | |||||||||||||||
| Diluted earnings per share | $ | 0.15 | $ | 0.15 | $ | 0.14 | $ | 0.46 | $ | 0.23 | |||||||||||||||
| Diluted core earnings per average share | $ | 0.15 | $ | 0.15 | $ | 0.14 | $ | 0.46 | $ | 0.36 | |||||||||||||||
| Average shares outstanding | 8,950,133 | 8,938,821 | 8,911,682 | 8,939,713 | 7,700,058 | ||||||||||||||||||||
| Diluted average shares outstanding | 9,264,445 | 9,220,760 | 9,036,264 | 9,226,119 | 8,006,106 | ||||||||||||||||||||
| Efficiency Ratio - GAAP | 61.1 | % | 62.4 | % | 64.9 | % | 62.0 | % | 74.8 | % | |||||||||||||||
| Efficiency - merger expense adjusted | 61.1 | % | 62.4 | % | 64.9 | % | 62.0 | % | 68.4 | % | |||||||||||||||
| Net merger expenses after tax | - | - | - | - | 631 | ||||||||||||||||||||
| ROAA GAAP | 1.07 | % | 1.05 | % | 0.96 | % | 1.07 | % | 0.65 | % | |||||||||||||||
| ROAE GAAP | 8.95 | % | 9.23 | % | 9.06 | % | 9.22 | % | 5.98 | % | |||||||||||||||
| ROAA (excl. merger exp) | 1.07 | % | 1.05 | % | 0.96 | % | 1.07 | % | 0.89 | % | |||||||||||||||
| ROAE (excl. merger exp) | 8.95 | % | 9.23 | % | 9.06 | % | 9.22 | % | 8.18 | % | |||||||||||||||
| Net Interest Margin - GAAP | 4.55 | % | 4.37 | % | 4.69 | % | 4.51 | % | 4.85 | % | |||||||||||||||