Pacific Commerce Bancorp Reports Strong Quarter in Earnings and Core Deposit Growth

LOS ANGELES--()--Pacific Commerce Bancorp (OTCBB:PCBC) (the “Company”), parent company of Pacific Commerce Bank (the “Bank”), reported results for the quarter ended September 30, 2016, reflecting continued growth in core earnings, core deposits and loan production. The Company’s third quarter results reflect the full impact of the ProAmérica Bank acquisition and integration which closed in the second quarter of 2016.

Financial Highlights for the Period

  • Earnings for the third quarter equaled $1,286,000, or $0.14 per diluted share, representing a return on average assets (ROAA) of 0.97% and a return on average equity (ROAE) of 9.13%.
  • Year-to-date core earnings (net of tax-effected, merger-related expenses) equaled $2,797,000, or $0.36 per diluted share, representing an ROAA of 0.84% and an ROAE of 7.74%.
  • The net interest margin for the current quarter was 4.69% compared to 4.43% in the same quarter last year and 4.22% in the second quarter of 2016.
  • The quarterly efficiency ratio was 64.9% compared to 74.7% in the same quarter last year and 68.6% in the second quarter of 2016 (adjusted for merger-related expenses).
  • Total noninterest bearing demand deposits grew 10.3%, or $18.4 million, to $196.0 million from $177.6 million at the end of the prior quarter.

Earnings for the third quarter ended September 30, 2016 totaled $1,286,000, or $0.14 per diluted share, compared to core earnings of $547,000, or $0.08 per diluted share, for the same period in 2015. Earnings for the third quarter of 2015 were impacted by nonrecurring, merger-related charges of $341,000, or $0.05 per diluted share, in connection with the Vibra Bank acquisition. There were no merger-related expenses recorded in the third quarter of 2016.

For the nine months ended September 30, 2016 net core earnings equaled $2,797,000, or $0.36 per diluted share, compared to net core earnings of $1,738,000, or $0.30 per diluted share, for the nine month period in 2015. Core earnings for the 2016 period are adjusted for tax-effected, merger-related expenses of $632,000 associated with the acquisition of ProAmérica Bank. Core earnings for the nine month period in 2015 were adjusted for tax-effected, merger-related expenses associated with the Vibra Bank acquisition and credit provision reversals of $500,000 in that year.

Chief Executive Officer Frank J. Mercardante said, “We are pleased with the progress we have made in realizing the synergies from the two acquisitions we have closed in the past sixteen months. Core earnings, deposits and loans have all continued to grow both organically and through acquisitions. Our staff remains focused on our key growth and earnings objectives. They have done an excellent job helping us to put another record quarter behind us and we continue to be excited about our future prospects.”

INCOME STATEMENT

Net interest income for the third quarter rose 66.5% to $5.9 million compared to $3.6 million in the third quarter of 2015 and $4.5 million in the second quarter of 2016. Average interest earning assets increased in the 2016 quarter to $503.8 million with a yield of 5.00% compared with average interest earning assets of $320.0 million in the same period in 2015 with a yield of 4.66%. Average interest earning assets in the second quarter of 2016 totaled $422.3 million with a yield of 4.48%.

The net interest margin for the third quarter of 2016 was 4.69% compared to 4.43% in the third quarter of 2015 and 4.22% in the prior quarter.

Non-interest income increased 52.1% in the third quarter of 2016 to $996,000, from $655,000 in the third quarter of 2015. The current quarter non-interest income increased by 14.4% compared to $871,000 in the second quarter of 2016. During the current quarter the largest increase in non-interest income was in SBA loan sales and servicing income, other non-interest income and deposit service charges and fees.

For the nine months ended September 30, 2016 non-interest income increased by 70.5% to $2.3 million from $1.4 million in the same period ended 2015. The largest increases were in SBA loan sales and servicing income, other non-interest income and deposit service charges and fees.

Non-interest expenses exclusive of merger-related expenses increased in the third quarter by 42.7% to $4.5 million from $3.2 million in the third quarter of 2015, with increases in salaries and benefits, occupancy expenses, legal and consulting and technology-related expenses representing the largest components of the increase.

For the nine months ended September 30, 2016 non-interest expenses exclusive of merger-related expenses increased by 47.7% to $11.4 million from $7.7 million in the same period ended 2015. The largest increases were in salaries and benefits, information technology and occupancy expenses. The efficiency ratio, which measures total revenue to total operating expense, improved to 64.9% in the third quarter from 74.7% in the same period in 2015 using core earnings as defined above. Year to date, the efficiency ratio improved to 72.2% from 87.6% for the first nine months of 2015 based on core earnings.

BALANCE SHEET

Assets increased 58.0% to $552.1 million at September 30, 2016 compared to $349.5 million a year earlier. Total loans increased 54.7% to $430.9 million compared to $278.5 million a year ago. New loan originations in the third quarter, and year-to-date, equaled $33.4 million and $95.4 million, respectively.

Total deposits increased to $478.7 million, or by 73.0%, from a year earlier and by 6.8% from the prior quarter-end. Total noninterest bearing demand deposits grew 96.8% to $196.1 million from $99.6 million a year ago and by 10.4%, or $18.4 million, at the June 30, 2016 quarter-end.

CREDIT QUALITY

Excluding $194.9 million in loans acquired from Vibra Bank and ProAmérica Bank that are covered under purchase accounting rules which are carried at a discount of 1.30% as of September 30, 2016, the allowance for loan and lease losses (ALLL) to total loans held for investment equaled 1.42% of loans outstanding. Total loans held for sale equaled $11.1 million at the end of the third quarter, including $1.1 million in mortgage loans which were held at a discount of 2.00% to the face value of the note. Provisions to the ALLL resumed in the third quarter to reflect the growth in the portfolio.

REGULATORY CAPITAL

Shareholders’ equity increased by 48.8% to $56.9 million as of September 30, 2016 compared to $38.3 million a year ago, primarily as a result of the ProAmérica Bank acquisition. Both the Company and Bank remained “Well-Capitalized” by regulatory definition, with capital ratios, as of September 30, 2016, as follows:

                   

Minimum

Required

          Company           Bank
Tier 1 Leverage Ratio: 4.00% 8.71% 9.71%
Common Equity Tier 1 Capital Ratio: 4.50% 10.03% 11.17%
Tier 1 Capital Ratio: 6.00% 10.03% 11.17%
Total Capital Ratio: 8.00% 10.81% 11.96%
 

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)

 
September 30, September 30, June 30,
2016 2015 % Change 2016
Assets
Cash and due from banks $ 25,803 $ 23,704 8.9 % $ 38,898
Federal funds sold 61,305 21,784 181.4 % 34,440
Investment securities 127 302 -57.9 % 186
Mortgage Warehouse Loans Held for Sale 1,092 2,007 -45.6 % 13,373
Other Loans Held for Sale 10,021 9,439 6.2 % 9,734
Loans, net of unearned income 430,947 278,525 54.7 % 433,546
Less: Allowance for loan losses   (3,493 )         (3,013 )       15.9 %         (3,182 )
Net Loans 438,567 286,958 52.8 % 453,471
Other assets   26,347           16,798         56.8 %         27,159  

Total Assets

$ 552,149         $ 349,546         58.0 %       $ 554,154  
 
Liabilities and Shareholders' Equity
Noninterest-bearing deposits $ 196,058 $ 99,616 96.8 % $ 177,633
Interest-bearing deposits   282,632           177,092         59.6 %         270,694  
Total Deposits 478,690 276,708 73.0 % 448,327
Borrowings 13,943 33,000 -57.7 % 48,939
Accrued interest and other liabilities   2,576           1,580         63.0 %         1,336  
Total Liabilities 495,209 311,288 59.1 % 498,602
 
Shareholders' Equity
Common stock 56,822 40,931 38.8 % 56,718
Retained Earnings 117 (2,679 ) 104.4 % (1,168 )
Other Comprehensive Income   1           6         -83.3 %         2  
Total Shareholders' Equity   56,940           38,258         48.8 %         55,552  
Total Liabilities & Shareholders' Equity $ 552,149         $ 349,546        

58.0

%       $ 554,154  
 
Book value per share at end of period $ 6.39 $ 5.85 9.3 % $ 6.24
Tangible Book Value per share at end of period $ 5.21 $ 5.28 -1.5 % $ 5.04
 
 
         

Pacific Commerce Bancorp

Consolidated Selected Financial Data – Unaudited

(Amounts are in thousands, except for earnings per share and shares outstanding data)

 
For the Nine Months Ended September 30, For the Three Months Ended September 30,
2016     2015     % change 2016     2015     % change
 
Total interest income $ 15,386 $ 9,581 60.6 % $ 6,328 $ 3,758 68.4 %
Total interest expense   968   518   86.9 %   384   187 105.3 %
Net interest income 14,418 9,063 59.1 % 5,944 3,571 66.5 %
Provision for loan losses 250 (500 ) 150.0 % 250 0 100.0 %
Total non-interest income 2,304 1,351 70.5 % 996 655 52.1 %

Non-Interest Expense

(Non-merger-Related)

  11,442   7,748   47.7 %   4,505   3,157 42.7 %

Income Before Merger-Related Expenses

and Income Taxes

5,030 3,166 58.9 % 2,185 1,069 104.4 %

Non-Recurring

Merger-Related Expenses

1,073 1,485 -27.7 % 0 341 -100.0 %
Income tax expense   1,792   817   119.3 %   899   382 135.3 %
Net Income $ 2,165 $ 864   150.6 % $ 1,286 $ 346 271.7 %
 
 
Basic earnings per share $ 0.24 $ 0.13 $ 0.14 $ 0.05
Diluted earnings per share $ 0.23 $ 0.12 $ 0.14 $ 0.05
Core earnings per average share, net of tax $ 0.36 $ 0.30 $ 0.14 $ 0.08
Average shares outstanding 7,700,058 5,797,586 8,911,682 6,538,755
 

Contacts

Pacific Commerce Bancorp
Long T. Huynh, Chief Financial Officer, 213-617-0082

Recent Stories

RSS feed for Pacific Commerce Bancorp

Pacific Commerce Bancorp