Pacific Commerce Bancorp Reports Strong 2015 Performance

LOS ANGELES--()--Pacific Commerce Bancorp (PCBC), parent company for Pacific Commerce Bank, today reported significantly improved fourth quarter and full year 2015 financial results.

“The Company achieved several new milestones during 2015 making us a stronger, more diverse and larger institution, with significantly expanded market coverage as we begin a new year”

2015 Fourth Quarter Financial Highlights

  • GAAP net income for three months ended December 31, 2015 totaled $630,632 compared to $139,000 in the 2014 fourth quarter.
  • Net income adjusted for one-time merger related expenses in the fourth quarter of 2015 were $706,000, compared to adjusted net income of $297,000 for the 2014 fourth quarter.
  • GAAP annualized return on average assets was 0.72%.
  • GAAP annualized return on average shareholder equity was 6.44%.
  • The net interest margin for the quarter was 4.18% for Q4-2015 compared to 4.13% for Q4-2014.
  • Nonperforming assets remain minimal.

2015 Full Year Financial Highlights

  • GAAP net income for the full year ended December 31, 2015 totaled $1,495,000 compared to $1,714,000 for the year ended December 31, 2014.
  • Net income, adjusted for one-time merger related expenses and credit provision reversals, totaled $2,275,000 for 2015, compared to 2014 net income of $728,000, adjusted for one-time merger related expenses and credit provision reversals in that year.
  • GAAP return on average assets was 0.48%.
  • GAAP return on average shareholder equity was 4.23%.
  • The full year net interest margin was 4.39% compared to 4.01% in 2014.
  • Total assets reached a record $353.4 million, total loans $306.9 million and total deposits $283.5 million.

“The Company achieved several new milestones during 2015 making us a stronger, more diverse and larger institution, with significantly expanded market coverage as we begin a new year”, stated Frank Mercardante, Chief Executive Officer of both the holding company and the bank.

The Bank completed its first acquisition in April 2015 with the close of the previously announced Chula Vista based Vibra Bank transaction. In December 2015, the Company announced that it had entered into a definitive agreement to acquire Los Angeles based ProAmerica Bank, which, subject to regulatory and shareholder approvals is expected to close in the second quarter of 2016.

Mercardante continued, “The successful acquisition of Vibra Bank increased our total assets by 60% and our total capital by 45%. Upon the successful close of the ProAmerica transaction, our total assets are expected to increase again by more than 50%, putting us well over $500 million in total assets. In addition, we opened our fifth banking office in Pasadena this month, expanding our Los Angeles market coverage even further. With the recent formation of our holding company, PCBC, we have greater flexibility and capacity in future activities and capital raising efforts”. In December 2015 the Company closed on a $4 million privately placed capital loan.

For the fourth quarter of 2015, the Company earned $631,000 or $0.09 per diluted share after one-time merger related charges of $83,000, compared to $139,000, or $0.03 per diluted share in the fourth quarter of 2014, after one-time merger related charges of $158,000.

For the twelve months ended December 31, 2015, the company earned $1,495,000, or $0.24 per diluted share after one-time merger related charges of $1,568,000 and a one-time credit provision reversal of $500,000. Without these one-time charges, core earnings were $2,275,000, or $0.36 per diluted share. This compares with earnings of $1,744,000, or $0.39 per diluted share after one-time merger related charges of $263,000 and a one-time loan loss provision reversal of $1.5 million for the full year of 2014. Excluding the merger-related expenses and credit provision reversals in 2014 the net, core earnings were $728,000, or $0.16 per diluted share.

INCOME STATEMENT

Net interest income increased in the fourth quarter by 63% to $3.4 million from $2.1 million in Q4-2014. The net interest margin improved during the quarter by four basis points to 4.17% from 4.13% in Q4-2014.

For the full year, net interest income increased by 64% to $12.5 million from $7.6 million for all of 2014. The net interest margin for 2015 increased to 4.39% from 4.01% in 2014 year earlier.

Non-interest income increased by 768% to $990,000 from $114,000 in the fourth quarter, with the largest increases coming from gain on sale of SBA loans, service charges and fees and other non-interest income. For the full year, non-interest income increased by 164% to $2.3 million from $ 0.9 million in 2014, with the largest increases coming from gain on sale of SBA loans, service charges and fees and other non-interest income.

Non-interest expenses increased by 67% to $12.6 million for all of 2015 compared to $7.5 million in the prior year. Net of merger related expenses, non-interest expenses increased by $3.7 million to $11.0 million from $7.3 million a year earlier with increases in salaries and benefits, occupancy expenses, legal, consulting, data processing, and network expenses representing the largest components of the increase.

BALANCE SHEET

Total assets at yearend 2015 increased by 62% to 353.4 million from $217.8 million at December 31, 2014. The strong growth reflects the consolidation of Vibra Bank in the second quarter of 2015 along with solid organic growth generated by the Company’s legacy branches. Total loans increased 57% to 306.7 million from $195.7 million a year earlier as a result of strong demand throughout the year.

Total deposits were also up significantly by $118.5 million from $165.5 million to $283.5 million in the prior year. Core deposits, which include all deposits demand, savings, money market and retail time deposits increased $113.6 million, or 89% to $240.9 from $127.4 in the prior year.

CREDIT QUALITY

The Bank had one nonaccrual loan with a balance of $2 thousand as of December 31, 2015. Overall credit quality remained strong during the quarter, resulting in the determination by management that no provision for the allowance for loan and lease loss was required.

The allowance for loan and lease losses to total loans, excluding loans acquired in the Vibra Bank merger and loans held for sale was 1.51%, versus 1.77% a year ago. In addition, loans acquired in the Vibra Bank merger totaling $85.8 million at the end of the quarter are carried at a discount of $0.7 million as required by GAAP and loans held for sale totaling $9.3 million are held at a discount of 2.00% to the face value of the note.

REGULATORY CAPITAL

The Company and Bank remained “Well-Capitalized” by regulatory definition with capital ratios, as of December 31, 2015, as follows:

       
Company Bank
Tier 1 Leverage Ratio: 10.12% 11.10%
Common Equity Tier 1 Capital Ratio: 11.57% 12.70%
Tier 1 Capital Ratio: 11.57% 12.70%
Total Capital Ratio: 12.62% 13.74%
 

About Pacific Commerce Bancorp

Pacific Commerce Bancorp is the parent company for Pacific Commerce Bank. Pacific Commerce Bank provides complete deposit and loan banking solutions to small businesses, professionals and high net worth individuals from Los Angeles to the Mexican border. The Bank is a Preferred SBA Lender and operates offices in Downtown Los Angeles, West Los Angeles, San Diego and Chula Vista. Pacific Commerce Bancorp’s common stock is publically 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 bank's actual results may differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that the bank 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 bank 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 bank cautions readers not to place undue reliance on any forward-looking statements. The bank 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 SHEET

12/31/2015

12/31/2014

% Change

Assets

Cash and due from banks $5,530 $2,041 170.9%
Federal funds sold 9,592 10,395 -7.7%
Investment securities 252 597 -57.8%
Loans held for sale 17,677 4,403 301.5%
Loans, net of unearned income 289,019 191,323 51.1%
Less: Allowance for loan losses (3,066) (3,379) -9.3%
Net Loans 303,630 192,347 57.9%
Other assets 34,389 12,400 177.3%
Total Assets $353,393 $217,780 62.3%
 

Liabilities

Noninterest-bearing deposits $111,963 $35,288 217.3%
Interest-bearing deposits 171,572 130,239 31.7%
Total deposits 283,535 165,527 71.3%
Borrowings 29,430 26,000 13.2%
Accrued interest and other liabilities 1,310 1,113 17.7%
Total Liabilities 314,275 192,640 63.1%
 
Shareholders' Equity
Common stock 41,162 28,669 43.6%
Retained earnings (2,048) (3,543) -42.2%
Other comprehensive income 4 14 -71.4%
Total Shareholders' Equity 39,118 25,140 55.6%
Total Liabilities & Shareholders' Equity $353,393 $217,780 118.7%
 
Book value per share at end of period $5.98 $5.64 6.1%
 
 
Pacific Commerce Bancorp
Consolidated Selected Financial Data – Unaudited

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

 
 

For the Twelve Months

Ended December 31,

  For the Three Months

Ended December 31,

STATEMENT OF OPERATIONS 2015   2014  

%
Change

2015   2014  

%
Change

 
Total interest income $13,205 $8,051 64% $3,624 $2,225 63%
Total interest expense 721   448   61%   203   122   66%
Net interest income 12,484 7,603 64% 3,421 2,103 63%
Provision for loan losses (500) (1,500) -67% 0 0 0%
Non-interest income 2,341 886 164% 990 114 768%
Non-interest expense (non-merger related) 10,958   7,252   51%   3,210   1,753   83%
Income before merger related expenses and income taxes 4,367 2,737 -60% 1,201 464 159%
Non-recurring merger related expenses 1,568 263 496% 83 158 -47%
Income tax expenses 1,304   730   79%   487   167   192%
Net income $1,495   $1,744   -14%   $631   $139   354%
 
Basic earnings per share $0.25 $0.39 -36% $0.10 $0.03 221%
Diluted earnings per share $0.24 $0.39 -40% $0.09 $0.03 216%
Average shares outstanding 5,985,648 4,461,255 6,543,701 4,461,255
 

Contacts

Pacific Commerce Bancorp
Richard Koh, 213-617-0082
Chief Financial Officer

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