SOURCE: Premier Commercial Bancorp

Premier Commercial Bancorp

April 22, 2015 16:00 ET

Premier Commercial Bancorp Reports First Quarter 2015 Results

HILLSBORO, OR--(Marketwired - Apr 22, 2015) - Premier Commercial Bancorp (OTCQB: PRCB), a single bank holding company for Premier Community Bank based in Hillsboro, Oregon, today reported net income of $529,000, or $0.09 per diluted share for the first quarter of 2015 compared to a net profit of $258,000, or $0.05 per diluted share for the first quarter of 2014.

Highlights for the quarter included:

  • Net interest margin for first quarter 2015 increased to 4.06% compared to 3.64% for fourth quarter 2014 and 3.60% for first quarter 2014.
  • Net interest income at $3.0 million for first quarter 2015 increased $141,000, or 4.9% when compared to the $2.9 million for fourth quarter 2014 and increased $316,000, or 11.6%, compared to the $2.7 million for first quarter 2014. The increase in net interest income and net interest margin was primary the result of the fourth quarter 2014 deleveraging of high cost FHLB debt from lower yielding cash and securities.
  • Outstanding loans increased $6.0 million, or 2.3%, over the past quarter and increased $15.9 million, or 6.4%, over the past year.
  • Deposits continued to grow and were $268.6 million at the end of first quarter 2015 compared to $246.7 million at year-end 2014 and $234.0 million a year ago.
  • ROE and ROA for first quarter 2015 were 6.97% and 0.65%, respectively, compared to 3.62% and 0.31% for first quarter 2014.
  • The Bank converted its loan production office in Newberg to a full-service branch.

"The Bank is producing excellent loan and deposit growth with significantly increased margins and profitability as the Bank is no longer burdened by the expensive FHLB debt which was pre-paid in December 2014. New business and economic activity is robust within our local markets, as the west side of Portland continues to be the economic engine of Oregon. And we have expanded into the Newberg market with a new full-service branch that opened in January of this year and our team is producing excellent results. So the Bank fundamentals are strong, our team remains solid, and we feel there will be continued momentum as we progress further into 2015," stated Rick A. Roby, the Company's President and CEO. 

Earnings

Interest income on earning assets at approximately $3.5 million for both the first quarters of 2015 and 2014, as well as for fourth quarter 2014, has been consistent as the increase in outstanding loan volumes have offset lower scheduled loan repricings and lower pricing on new loans due to competitive pressures. The average yield on the Bank's loan portfolio was 5.21% for first quarter 2015 compared to 5.40% for the first quarter of 2014 and 5.32% for fourth quarter 2014. Interest expense at $480,000 for first quarter 2015 was down considerably compared to the $677,000 for fourth quarter 2014 and was down even further when compared to the $812,000 for first quarter 2014. The reduction in interest expense was primarily attributable to the prepayment of $25.0 million of FHLB debt that had an average cost of 4.50% and was prepaid in December 2014. When comparing year-over-year interest expense for the first quarters of 2015 and 2014, also contributing to the most recent quarter's reduced interest expense was the conversion of $1.1 million of 8.50% subordinated notes into common shares of the Company during third quarter 2014. As a result of stable revenues on earning assets and reduced interest expenses due to reduced borrowings, the Company's net interest income has grown from $2.7 million during first quarter 2014 and $2.9 million for fourth quarter 2014, to over $3.0 million for first quarter 2015. These reductions in high cost liabilities have also increased the Company's net interest margin to 4.06% for first quarter 2015 compared to 3.64% and 3.60% for the fourth and first quarters of 2014, respectively.

Non-interest income at $157,000 for first quarter 2015 was consistent with prior periods and non-interest expenses at $2.4 million for first quarter 2015 was consistent with amounts for both the fourth and first quarters of 2014 as the increased costs of existing personnel and the new branch for first quarter 2015 have been offset by reduced costs associated with troubled assets. 

Assets

Total assets as of March 31, 2015 increased $6.2 million, or 1.9%, to $338.7 million when compared to the $332.5 million as of March 31, 2014 and were up $14.3 million, or 4.4% when compared to the $324.4 million as of December 31, 2014. Contributing to the increase in assets over this past quarter was a $10.0 million increase in cash due to a surge in temporary deposits. Loan growth also contributed to the increase in total assets and at $263.7 million as of March 31, 2015, they have increased $6.1 million over the past quarter compared to the $257.6 million outstanding as of December 31, 2014 and have increased $15.9 million, or 6.4%, over the past year compared to the $247.8 million as of March 31, 2014. Fred Johnson, the Bank's Chief Credit Officer, stated, "The Bank is very pleased with its loan growth over the past quarter and year. Businesses are becoming increasingly optimistic in their outlook and are now also becoming confident in borrowing to fund investment for future growth. And while the competition for quality loans remains strong, our team has remained steadfast in pursuit of quality business opportunities." Most of the loan growth over the past year has come from owner-occupied commercial real estate loans which at $81.4 million as of March 31, 2015 were 30.9% of total loans. Non-owner occupied commercial real estate loans were $48.7 million, or 18.5% of total loans while real estate acquisition, development, and construction loans were $28.1 million, or 10.6% of the total loan portfolio as of March 31, 2015. Non-real estate commercial and industrial (C&I) loans were $71.6 million, or 27.2% of the loan portfolio as of March 31, 2015.

The allowance for loan losses as of March 31, 2015 at $4.3 million, or 1.63% of total loans, was consistent with the December 31, 2014 amounts and was below the $5.5 million, or 2.23% of total loans as of March 31, 2014 due to the 2014 fourth quarter partial loan charge-off of $1.1 million related to a borrower in bankruptcy. For first quarter 2015, the Bank had $91,000 in loan charge-offs and $23,000 in recoveries, or $68,000 in net charge-offs. The Bank had no loan loss provision expense for first quarter 2015 or for the full-year of 2014. 

As of March 31, 2015 and March 31, 2014, the Bank had no loans that were past due over 30 days and still accruing interest compared to December 31, 2014 when the Bank had two loans totaling $765,000 that were past due over 30 days and still accruing interest. 

Non-performing assets (consisting of loans on nonaccrual status and other real estate owned-OREO) as of March 31, 2015 were $9.1 million, or 2.7% of total assets, and were down $4.0 million or 30.4% compared to the $13.1 million, or 3.9% of total assets as of March 31, 2014. As of March 31, 2015 the Bank had $3.8 million in loans on nonaccrual status which consisted of three relationships (for which one borrower accounted for $3.3 million of this amount). OREO as of March 31, 2015 consisted of 9 projects/properties with carrying amounts ranging from $45,000 to $2.8 million and totaled $5.3 million in aggregate.

Deposits

Deposits at the Bank totaled $268.6 million as of March 31, 2015 and were up $21.9 million or 8.9% compared to the $246.7 million as of December 31, 2014 and were up $34.6 million, or 14.8%, compared to the $234.0 million as of March 31, 2014. Bob Ekblad, the Company's Chief Financial Officer, stated, "Toward the end of 2014, the Bank saw a significant increase in temporary deposits from our existing customers which were not expected to stay for long. Many of these temporary deposits have rolled-out of the Bank but some continue to stay and there has also been a considerable amount of new additional perceived temporary funds deposited over this past quarter." And Mr. Ekblad continues, "The Bank remains cognizant of the short-term nature of some of this recent deposit growth and has retained considerable liquidity recognizing the temporary nature of such deposits and continues to focus considerable energies and resources on long-term core deposit growth strategies." The Bank had no brokered deposits and non-traditional out-of-area time deposits were $41.0 million as of March 31, 2015 compared to $39.3 million as of March 31, 2014. 

Borrowings, Equity and Capital

Through a concerted effort the Bank has worked to reduce the amount of its outstanding client repurchase agreements as they are more expensive and less beneficial to the Bank than traditional deposits. At $6.7 million as of March 31, 2015, repurchase agreements were down $7.5 million, or 52.6%, from the $14.2 million as of March 31, 2014. Federal Home Loan Bank (FHLB) debt totaled $19.3 million as of March 31, 2015 compared to $16.0 million as of December 31, 2014 and $41.0 million as of March 31, 2014. The year-over-year decline in FHLB debt was due to the early December 2014 prepayment, at a penalty of almost $2.0 million, of $25.0 million in FHLB notes that had a weighted average cost of 4.50%. And included within "Other Borrowings" as March 31, 2014, the Company had $1.1 million of 8.50% subordinated notes that were scheduled to mature in December 2014; however, during third quarter 2014, the Company converted all those notes, plus interest that would have been earned through maturity, to common stock at $4.40 per share, or 259,441 shares in total. 

Through retained earnings over the past twelve months and the third quarter 2014 conversion of notes to common stock, the Company's equity increased $1.8 million, or 6.2% to $31.0 million as of March 31, 2015. At the Bank level, capital ratios continue to be well above regulatory standards. The Bank's leverage ratio and total risk-based capital ratio as of March 31, 2015 were approximately 11.9% and 14.0% respectively.

About Premier Commercial Bancorp:

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

Premier Commercial Bancorp was formed in 2002 as a holding company for Premier 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. The Bank serves the greater Portland Metropolitan area with four offices in Washington County and also serves Yamhill County with an office in Newberg. 

For more information about Premier 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) 
                               
    March 31,     % Change     December 31,     % Change  
    2015     2014     2015 vs. 2014     2014     Quarter  
                                     
ASSETS                                    
  Cash & due from banks   $ 31,794     $ 22,756     39.7 %   $ 21,751     46.2 %
  Investment Securities - Available for Sale     22,826       42,901     -46.8 %     23,948     -4.7 %
  Investments - Other     3,994       2,129     87.6 %     4,025     -0.8 %
                                     
  Gross loans     263,669       247,753     6.4 %     257,624     2.3 %
  Allowance for loan losses     (4,295 )     (5,519 )   -22.2 %     (4,362 )   -1.5 %
    Net loans     259,374       242,234     7.1 %     253,262     2.4 %
                                     
  Other real estate owned     5,346       6,942     -23.0 %     5,411     -1.2 %
  Other assets     15,378       15,570     -1.2 %     15,953     -3.6 %
                                     
    Total Assets   $ 338,712     $ 332,532     1.9 %   $ 324,350     4.4 %
                                     
LIABILITIES                                    
  Deposits   $ 268,593     $ 233,996     14.8 %   $ 246,708     8.9 %
  Repurchase agreements     6,712       14,155     -52.6 %     18,188     -63.1 %
  FHLB borrowings     19,300       41,000     -52.9 %     16,000     20.6 %
  Other borrowings     1,215       2,435     -50.1 %     1,247     -2.6 %
  Junior subordinated debentures     8,248       8,248     0.0 %     8,248     0.0 %
  Other liabilities     3,650       3,511     4.0 %     3,588     1.7 %
    Total Liabilities     307,718       303,345     1.4 %     293,979     4.7 %
                                     
STOCKHOLDERS' EQUITY     30,994       29,187     6.2 %     30,371     2.1 %
    Total Liabilities and Stockholders' Equity   $ 338,712     $ 332,532     1.9 %   $ 324,350     4.4 %
                                     
Shares outstanding at end-of-period     5,795,415       5,535,974             5,795,415        
Book value per share   $ 5.35     $ 5.27           $ 5.24        
Allowance for loan losses to total loans     1.63 %     2.23 %           1.69 %      
Non-performing assets (non-accrual loans & OREO)   $ 9,116     $ 13,105           $ 9,351        
                                     
Bank Tier 1 leverage ratio (approximate for 03/31/2015)     11.90 %     10.93 %           10.88 %      
Bank Tier 1 risk-based capital ratio (approx. for 03/31/2015)     12.75 %     13.07 %           12.94 %      
Bank Total risk-based capital ratio (approx. for 03/31/2015)     14.00 %     14.33 %           14.19 %      
                                     
   
Consolidated Statement of Operations  
Unaudited  
(amounts in 000s, except per share data and ratios)  
                               
    Three Months Ended           Three Months Ended        
    3/31/2015     3/31/2014     % Change     12/31/2014     % Change  
INTEREST INCOME                                    
  Loans   $ 3,375     $ 3,326     1.5 %   $ 3,387     -0.4 %
  Investments     115       195     -41.0 %     156     -26.3 %
  Federal funds sold and other     31       16     93.8 %     34     -8.8 %
    Total interest income     3,521       3,537     -0.5 %     3,577     -1.6 %
                                     
INTEREST EXPENSE                                    
  Deposits     266       285     -6.7 %     259     2.7 %
  Repurchase agreements and federal funds purchased     6       9     -33.3 %     8     -25.0 %
  FHLB borrowings     131       408     -67.9 %     332     -60.5 %
  Other borrowings     23       48     -52.1 %     23     0.0 %
  Junior subordinated debentures     54       62     -12.9 %     55     -1.8 %
    Total interest expense     480       812     -40.9 %     677     -29.1 %
                                     
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES     3,041       2,725     11.6 %     2,900     4.9 %
                                     
PROVISION FOR LOAN LOSSES     -       -     0.0 %     -     0.0 %
                                     
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES     3,041       2,725     11.6 %     2,900     4.9 %
                                     
NON-INTEREST INCOME     157       153     2.6 %     151     4.0 %
                                     
NON-INTEREST EXPENSE     2,446       2,440     0.2 %     2,453     -0.3 %
                                     
FHLB NOTE PREPAYMENT PENALTIES     -       -     0.0 %     (1,955 )   -100.0 %
INVESTMENTS- REALIZED GAINS / (LOSSES)     -       -     0.0 %     1,024     -100.0 %
OREO VALUATION ADJUSTMENTS & GAINS/(LOSSES) ON SALES - NET     55       (64 )   -185.9 %     (231 )   -123.8 %
                                     
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES     807       374     115.8 %     (564 )   -243.1 %
                                     
PROVISION (BENEFIT) FOR INCOME TAXES     278       116     139.7 %     (246 )   -213.0 %
                                     
NET INCOME (LOSS)   $ 529     $ 258     105.0 %   $ (318 )   -266.4 %
                                     
Earnings (Loss) per share - Basic   $ 0.09     $ 0.05           $ (0.06 )      
                                     
Earnings (Loss) per share - Diluted   $ 0.09     $ 0.05           $ (0.06 )      
                                     
Return on average equity     6.97 %     3.62 %           -4.04 %      
Return on average assets     0.65 %     0.31 %           -0.37 %      
Net interest margin     4.06 %     3.60 %           3.64 %      
Efficiency ratio     76.5 %     84.8 %           80.4 %      
                                     

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