SOURCE: Columbia Commercial Bancorp

Columbia Commercial Bancorp

January 30, 2014 16:01 ET

Columbia Commercial Bancorp Reports Full Year and Fourth Quarter 2013 Results

HILLSBORO, OR--(Marketwired - Jan 30, 2014) - Columbia Commercial Bancorp (OTCBB: CLBC), a single bank holding company for Premier Community Bank, the new name for Columbia Community Bank (the Bank), reports net income of $1.1 million, or $0.25 per diluted share, for the year ended December 31, 2013 compared to $1.2 million, or $0.38 per diluted share for 2012. As the result of several non-recurring items for the quarter, including a significant OREO valuation expense of $1.8 million, the Company had a loss of $48,000 for fourth quarter 2013 compared to net income of $466,000 during third quarter 2013. 

"For 2013 the Bank continued its pattern of success as we strengthened the loan portfolio, significantly increased core deposits, raised additional capital, and successfully changed the Bank's name, however increased non-interest expenses from problem assets, the name change, and OREO write-downs challenged earnings for the year and especially this past quarter. We believe the Company is well-positioned as we move into 2014 and that most of these non-recurring expenses are behind us," stated the Company's President and CEO, Rick A. Roby.

Earnings

Net income for the full-year 2013 at $1.1 million, was down $157,000, or 12.6% when compared to the same period for 2012 due to the $48,000 net loss for fourth quarter 2013 which was the result of $1.8 million in net OREO write-downs and an intermittent increase in other non-interest expenses. Earnings per diluted share for the twelve months ended December 31, 2013 of $0.25 were down from the $0.38 per diluted share for the same period of 2012 primarily from the increase in average outstanding common shares (as 486,250 were issued December 31, 2012 in the conversion of $1.9 million of debt and 1,760,222 shares were issued in a private placement during September 2013).

Interest income on earning assets at $13.9 million for 2013 was down $811,000, or 5.5%, when compared to the $14.7 million for 2012 due to scheduled loan repricings, competitive pressure on both existing loan pricing and new originations, and a reduction in investment income from lower yielding reinvestments. This was, however, offset by a reduction in interest expense of over $1.6 million, or 31.0%, for the year which was from the reduction of expensive non-core deposits, an improvement in the overall deposit mix, and the reduction of borrowings. Net interest income for 2013 was $10.3 million, an increase of $807,000, or 8.5%, over the $9.5 million for 2012. While net interest margin for 2013 at 3.38% was above the 3.24% for 2012, the Bank continues to experience increased pressure on its margin as favorable liability repricings are fewer moving forward and asset yields continue under pressure. Excluding the third quarter 2013 net interest margin of 3.48% which was skewed by nonaccrual loan interest recaptures, the net interest margin of 3.27% for fourth quarter was down from the 3.39% for both the first and second quarters of 2013. 

During the fourth quarters of both 2013 and 2012, due to continued improvements in the quality of the Bank's loan portfolio and minimal net charge-off activity, the Bank took a reverse loan loss provision of $750,000.

During fourth quarter 2013 the Bank recognized $900,000 in non-recurring other income as settlement from an outside party in a non-loan related matter. Net gains or losses on the sale of OREO and valuation adjustments amounted to a $1.6 million expense for the year, of which $1.8 million was taken in the fourth quarter as the Bank's largest OREO property, development ground in southern Oregon, was substantially devalued in its routine annual appraisal due to many recent distressed sales of similar properties in the area.

Noninterest expense was projected to rise year-over-year due to increased costs of existing personnel, strategic new hires, regulation, and technology; however at $9.4 million for 2013, it was up $780,000, or 9.0%, when compared to the prior year. This deviation was driven by the Bank's strategic decision to change its name and from a significant increase in problem asset related expenses. As the Bank's prior name, Columbia Community Bank, was losing its ability to differentiate itself from other similarly named banks already within its marketplace and from others recently entering its markets, Bank management and its board felt it appropriate to promptly change its name so that individuals and businesses in its communities continue to recognize the Bank's independence and unique product offerings. The direct costs associated with the name change incurred during 2013 were $172,000, of which $149,000 were during the fourth quarter when the Bank's name was officially changed. Much of the direct expense related to the name change was accounted for in 2013; however there will be some additional expense incurred in 2014 for continued and increased advertising and marketing. 

Problem asset related expenses (legal and professional fees on troubled loans and OREO as well as the holding costs of OREO such as management fees and real estate taxes) for fourth quarter amounted to $301,000 as a few problem loan work-outs entered into what should be the final stages of resolution. Problem asset related expenses for the full year of 2013 were $617,000, up $334,000 when compared to the $283,000 for 2012.

Assets

Total assets at $335.1 million as of December 31, 2013 increased $12.5 million, or 3.9%, from the $322.6 million as of December 31, 2012. The growth in assets for the year was driven by an increase in loans and an increase in excess cash driven by an increase in deposits. 

Total loans at $248.4 million as of December 31, 2013 were up $3.7 million, or 1.5%, over the past quarter and for the year as outstanding loans at both September 30, 2013 and December 31, 2012 were $244.8 million. Real estate acquisition, development, and construction loans were $26.4 million, or 10.6%, of total loans as of December 31, 2013 and were down $14.8 million, or 36.0%, when compared to the $41.2 million as of December 31, 2012. The Bank's Chief Credit Officer, Fred Johnson, commented "During this economic downturn, it was our loans to builders and developers that were most severely impacted and we have been working with these clients over these past few years and it was no simple task. However, most of these troubled borrowers have settled their obligations with the Bank and requests for new construction loans are accepted only on a select basis. As a result of this migration, not only were outstanding construction and development loans down dramatically, but so were their problem loans such that at year-end there were only two construction-related relationships that were in non-accrual status which totaled $1.5 million, and of this amount, $1.3 million was paid-down the second week of January 2014." As of December 31, 2013, commercial and industrial (C&I) loans outstanding were $76.3 million, or 30.7% of total outstanding loans, which was consistent with the 2012 year-end amount of $75.5 million while commercial real estate loans at $114.0 million, or 45.8% of total loans at year-end 2013 were up $18.2 million, or 19.0%, from the $95.8 million as of December 31, 2012.

The underlying credit metrics of the loan portfolio continue to improve year-over-year, and as a result the Bank took a reverse loan loss provision of $750,000 for the fourth quarters of both 2013 and 2012. For 2013, the Bank had minimal other activity affecting the allowance for loan losses as loan charge-offs were $290,000 and recoveries were $309,000, for net recoveries of $19,000 for the year. During 2012, the Bank had $1.8 million in charge-offs and $1.6 million in recoveries, or $180,000 in net charge-offs for the year. The allowance for loan losses as of December 31, 2013 at $5.4 million was 2.18% of outstanding loans while at December 31, 2012 the allowance for loan losses was $6.2 million, or 2.51% of outstanding loans. 

As of December 31 and September 30, 2013 the Bank had no loans past due over 30 days and still accruing interest which Mr. Johnson adds, "This certainly provides evidence that new loans made during the past few years are performing very well and that the Bank's problem loans continue to be attributable to the past real estate downturn." 

Nonaccrual loans as of December 31, 2013 totaled $7.6 million and consisted of five borrowers with loans ranging in size from $8,000 to $578,000, one borrower with loans of $1.3 million (that were subsequently fully paid in early January 2014) and one other borrower with multiple loans totaling $5.1 million which were moved to nonaccrual status during third quarter 2013. Other real estate owned (OREO) was $7.6 million as of December 31, 2013 and consisted of thirteen different properties/projects. Nine of these properties ranged in carrying amounts from $45,000 up to $483,000, three other properties ranged in carrying amounts from $773,000 to $1.1 million, and the Bank's largest OREO property had a carrying amount of $2.9 million (after a $1.7 million valuation adjustment taken during this past quarter). Non-performing assets consist of both nonaccrual loans and OREO totaled $15.1 million, or 4.51% of total assets, as of December 31, 2013 compared to $17.7 million as of December 31, 2012 when they were 5.47% of total assets. 

Deposits

"While total deposits grew $6.1 million during 2013, the Bank also reduced its brokered and other non-traditional out-of-area time deposits by over $14.0 million, so core deposit growth exceeded $20.1 million for the year which reflects well upon our strategic initiatives and energies around deposit acquisition," states Bob Ekblad, the Company's Chief Financial Officer. Total deposits as of December 31, 2013 were $234.1 million which was a 2.7%, increase over the $228.0 million as December 31, 2012. For fourth quarter, total deposits were down $2.1 million, or 0.9% when compared to the $236.2 million as of September 30, 2013, however during the quarter, the Bank reduced outstanding brokered deposits by $1.8 million and other non-traditional out-of-area time deposits by almost $1.1 million, therefore other deposit growth for the quarter was positive. During 2013, the Bank paid down $4.5 million in brokered deposits while also reducing other non-traditional out-of-area time deposits by almost $9.5 million. As of December 31, 2013 the Bank had $440,000 in one brokered deposit that matures in February 2014 and had other non-traditional out-of-area time deposits of $40.3 million with varying maturities spread over the next several years.  

Equity and Capital

The Company completed a stock offering during the third quarter of 2013 in which it sold 1,760,222 common shares to a variety of accredited investors through a private placement at $3.75 per share. Net proceeds were $6.1 million of which $4.4 million was down streamed to the Bank to provide additional capital support and to facilitate growth in its current and expanded markets while $1.2 million of the proceeds will be utilized in March 2014 to pay deferred interest on its subordinated debentures. The net stock proceeds along with the retained earnings for 2013 resulted in a $6.9 million, or 32.3% increase to stockholders' equity which was $28.4 million as of December 31, 2013 compared to $21.5 million for the prior year-end. As a result of the capital injection and its retained earnings for the year, the Bank's leverage ratio was 10.65% as of December 31, 2013 compared to 8.79% as of December 31, 2012, and its total risk based capital ratio was 14.23% as of December 31, 2013, compared to 12.16% as of December 31, 2012. The Bank's capital ratios decreased slightly over the last quarter of 2013 due to an increase in average assets as well as an increase in the amount of disallowed deferred tax asset from regulatory calculations of capital as a result of the substantial book write-down in OREO property. 

About Columbia Commercial Bancorp:

Information about the Company's stock may be obtained through the OTCQB marketplace at www.otcmarkets.com. Columbia Commercial Bancorp's stock symbol is CLBC.

Columbia Commercial Bancorp was formed in 2002 as a holding company for Premier Community Bank, the new name for Columbia Community Bank, which was opened in 1999 by local business people to deliver loan and deposit product solutions through experienced and professional bankers to businesses, nonprofits, professionals, and individuals throughout Washington County and the greater Portland metropolitan area. The Bank has been named among the "100 Best Companies to Work for in Oregon" by Oregon Business Magazine for 2009, 2011, 2012, and 2013.

For more information about Columbia Commercial Bancorp, or its subsidiary Premier Community Bank, call (503) 693-7500 or visit our website at www.pcboregon.com. Information contained in or linked to our website is not incorporated as a part of this release.

Certain statements in this release may constitute forward-looking statements within the definition of the "safe-harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to significant uncertainties, which could cause actual results to differ materially from those set forth in such statements. Forward-looking statements are those that incorporate management's current expectations and plans based on information currently known to them. These statements can sometimes be identified by words such as "believe," "estimate," "anticipate," "expect," "intend," "will," "may," "should," or other similar phrases or words. Readers are cautioned not to place undue reliance on forward-looking statements. In particular, they should not be construed as assurances of a given level of performance or as promises of a given set of management's actions. Some of the factors that could cause management to deviate from its current plans, or could cause the Company's results to differ from current expectations, include the effect of localized or regional economic shifts that may affect the collectability of loans or the value of the collateral underlying those loans; the effects of laws, regulations, policies and government actions upon the Company's assets and operations; sensitivity to the Northwestern Oregon geographic markets and events affecting those markets; and the impacts of new government initiatives upon us and our borrowers. The Company does not intend to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

   
Consolidated Balance Sheet
Unaudited
(amounts in 000s, except per share data and ratios)
 
                               
                               
    December 31,     % Change     September 30,     % Change  
    2013     2012     Year-to-Date     2013     Quarter  
                                     
ASSETS                                    
  Cash & due from banks   $ 27,602     $ 19,102     44.5 %   $ 33,387     -17.3 %
  Federal funds sold     -       -     0.0 %     -     0.0 %
  Investment Securities - Available for Sale     39,471       40,019     -1.4 %     40,726     -3.1 %
  Investments - Other     2,149       2,227     -3.5 %     2,168     -0.9 %
                                     
  Gross loans     248,434       244,765     1.5 %     244,841     1.5 %
  Allowance for loan losses     (5,422 )     (6,153 )   -11.9 %     (6,092 )   -11.0 %
    Net loans     243,012       238,612     1.8 %     238,749     1.8 %
                                     
  Other real estate owned     7,598       7,289     4.2 %     8,993     -15.5 %
  Other assets     15,294       15,370     -0.5 %     15,175     0.8 %
                                     
    Total Assets   $ 335,126     $ 322,619     3.9 %   $ 339,198     -1.2 %
                                     
LIABILITIES                                    
  Deposits   $ 234,082     $ 227,977     2.7 %   $ 236,161     -0.9 %
  Repurchase agreements     16,530       17,438     -5.2 %     17,334     -4.6 %
  Federal funds purchased     -       -     0.0 %     -     0.0 %
  FHLB borrowings     41,000       41,000     0.0 %     41,000     0.0 %
  Other borrowings     2,465       2,579     -4.4 %     2,494     -1.2 %
  Junior subordinated debentures     8,248       8,248     0.0 %     8,248     0.0 %
  Other liabilities     4,355       3,882     12.2 %     5,366     -18.8 %
    Total Liabilities     306,680       301,124     1.8 %     310,603     -1.3 %
                                     
STOCKHOLDERS' EQUITY     28,446       21,495     32.3 %     28,595     -0.5 %
    Total Liabilities and Stockholders' Equity   $ 335,126     $ 322,619     3.9 %   $ 339,198     -1.2 %
                                     
Shares outstanding at end-of-period     5,535,974       3,759,677             5,535,974        
Book value per share   $ 5.14     $ 5.72           $ 5.17        
Allowance for loan losses to total loans     2.18 %     2.51 %           2.49 %      
Non-performing assets (non-accrual loans & OREO)   $ 15,136     $ 17,661           $ 18,888        
                                     
Bank Tier 1 leverage ratio (5% minimum for "well-capitalized")     10.65 %     8.79 %           10.95 %      
Bank Tier 1 risk-based capital ratio (6% minimum for "well-capitalized")     12.97 %     10.90 %           13.10 %      
Bank Total risk-based capital ratio (10% minimum for "well-capitalized")     14.23 %     12.16 %           14.37 %      
                                     
   
Consolidated Statement of Operations
Unaudited
(amounts in 000s, except per share data and ratios)
 
   
    Twelve Months Ended              Three Months Ended        
    12/31/
2013
    12/31/
2012
    %
Change
    12/31/
2013
    9/30/
2013
    %
Change
 
INTEREST INCOME                                            
  Loans   $ 13,286     $ 13,838     -4.0 %   $ 3,211     $ 3,406     -5.7 %
  Investments     586       833     -29.7 %     180       146     23.3 %
  Federal funds sold and other     60       72     -16.7 %     15       13     15.4 %
    Total interest income     13,932       14,743     -5.5 %     3,406       3,565     -4.5 %
                                             
INTEREST EXPENSE                                            
  Deposits     1,420       2,141     -33.7 %     303       334     -9.3 %
  Repurchase agreements and federal funds purchased     67       179     -62.6 %     12       12     0.0 %
  FHLB borrowings     1,654       2,143     -22.8 %     417       416     0.2 %
  Other borrowings     199       489     -59.3 %     49       50     -2.0 %
  Junior subordinated debentures     253       259     -2.3 %     62       63     -1.6 %
    Total interest expense     3,593       5,211     -31.0 %     843       875     -3.7 %
                                             
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES     10,339       9,532     8.5 %     2,563       2,690     -4.7 %
                                             
PROVISION FOR LOAN LOSSES     (750 )     (750 )   0.0 %     (750 )     -     n/a  
                                             
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES     11,089       10,282     7.8 %     3,313       2,690     23.2 %
                                             
NON-INTEREST INCOME     609       668     -8.8 %     145       164     -11.6 %
                                             
NON-INTEREST EXPENSE     9,428       8,648     9.0 %     2,652       2,294     15.6 %
                                             
NON-RECURRING SETTLEMENT     900       -     n/a       900       -     n/a  
INVESTMENTS- REALIZED GAINS / (LOSSES)     -       51     0.0 %     -       -     0.0 %
INVESTMENTS - OTHER THAN TEMPORARY IMPAIRMENT     -       -     0.0 %     -       -     0.0 %
OREO VALUATION ADJUSTMENTS & GAINS/(LOSSES) ON SALES - NET     (1,611 )     (19 )   8378.9 %     (1,831 )     132     -1487.1 %
                                             
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES     1,559       2,334     -33.2 %     (125 )     692     -118.1 %
                                             
PROVISION (BENEFIT) FOR INCOME TAXES     470       1,088     -56.8 %     (77 )     226     -134.1 %
                                             
NET INCOME (LOSS)   $ 1,089     $ 1,246     -12.6 %   $ (48 )   $ 466     -110.3 %
                                             
Earnings (Loss) per share - Basic   $ 0.25     $ 0.39           $ (0.01 )   $ 0.10        
                                             
Earnings (Loss) per share - Diluted   $ 0.25     $ 0.38           $ (0.01 )   $ 0.10        
                                             
Return on average equity     4.55 %     6.64 %           -0.67 %     7.98 %      
Return on average assets     0.33 %     0.36 %           -0.06 %     0.56 %      
Net interest margin     3.38 %     3.24 %           3.27 %     3.48 %      
Efficiency ratio     86.1 %     84.8 %           97.9 %     80.4 %      
                                             

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