SOURCE: Premier Commercial Bancorp

Premier Commercial Bancorp

April 26, 2017 16:13 ET

Premier Commercial Bancorp Reports First Quarter 2017 Results

HILLSBORO, OR--(Marketwired - Apr 26, 2017) - Premier Commercial Bancorp (OTC: PRCB), a single bank holding company for Premier Community Bank based in Hillsboro, Oregon, today reported net income of $939,000, or $0.16 per diluted share, for the three months ended March 31, 2017, a 21.2% increase over the net income of $775,000, or $0.13 per diluted share, for the same three month period during 2016. 

Highlights for the period included:

  • Loans grew by $5.8 million, or 1.8%, during the quarter to end at $323.4 million and by $29.8 million, or 10.1%, during the past twelve months.
  • Net interest income at $3.8 million was up $263,000, or 7.4% compared to $3.5 million for first quarter 2016. 
  • Net interest margin at 4.30% increased by 12 basis points when compared to fourth quarter 2016 at 4.18% due to improved asset mix and rising market interest rates.
  • ROE and ROA for first quarter 2017 were 10.25% and 0.99%, respectively; while first quarter 2016 ROE and ROA were 9.24% and 0.89%.
  • Efficiency ratio at 63.2% for first quarter 2017 improved when compared to the 70.2% for first quarter 2016. 

"Our team of talented and experienced bankers produced excellent income and growth results during first quarter 2017. The robust economic environments in which our offices are located remain some of the strongest in the Pacific Northwest which contributes to our operating successes. Premier Community Bank celebrated its 18th anniversary on April 12th as a locally owned and operated independent community bank and we are very proud of our accomplishments over the years," stated Rick A. Roby, the Company's President and CEO.

Earnings

Net income of $939,000, or $0.16 per diluted share, for the first quarter of 2017 was an increase of $164,000 or 21.2% from the first quarter of 2016 which was $775,000 or $0.13 per diluted share which also had $112,000 of gains on the sale of OREO. Although net income for the quarter increased year-over-year it decreased from the prior quarter by $57,000, or 5.7%, which was attributable to an increase in non-interest expense that increased $105,000 or 4.3% from prior quarter. Driving the increase in non-interest expense was the increase in salaries and benefits for existing employees which are adjusted at the beginning of every calendar year (vs. anniversary dates). Non-interest expense of $2.5 million for the first quarter of 2017 was down 64,000 or 2.5% from the same period in the prior year. Non-interest income at $214,000 for first quarter 2017 was comparable to the prior quarter, but increased $44,000 or 25.9% from the same period in the prior year when it was $170,000. Jason Wessling, the Company's Chief Financial Officer, regarding earnings growth stated, "Interest on earning assets and net interest income continue to increase as the Bank grows and it has also been well positioned to take advantage of the recent increases in market interest rates and will continue to benefit from a continued rising rate environment as we move forward."

Net interest income of $3.8 million was up $263,000, or 7.4%, from the $3.5 million for first quarter of 2016 and was up $28,000, or 0.7%, from the fourth quarter of 2016. Net interest margin at 4.30% for first quarter 2017 was down slightly from first quarter 2016 when it was 4.32% but was a 12 basis point increase from the prior quarter when it was 4.18% for fourth quarter 2016. 

As the credit metrics of the Bank's loan portfolio and local economies remain stable, the Bank took no loan loss provision for first quarter 2017 or all of 2016, however as the loan portfolio continues to grow, this trend is not expected to continue. 

The Company's return on equity increased to 10.25% for the first quarter of 2017 compared to 9.24% for first quarter 2016 and return on assets increased to 0.99% for the first quarter 2017 relative to 0.89% in first quarter 2016. Current quarter returns were down slightly from fourth quarter's return on equity of 10.92% and return on assets of 1.03% due to rising non-interest expense. The Company's efficiency ratio improved to 63.2% for the first quarter of 2017 when compared to the 70.2% for first quarter 2016 but was up slightly from the 61.0% for fourth quarter 2016.

Assets

Total assets grew by $31.9 million, or 9.0%, to $387.1 million as of March 31, 2017 compared to $355.2 million as of March 31, 2016. While assets grew year-over-year, they decreased during the quarter by $3.3 million, or 0.8%, compared to December 31, 2016 when they totaled $390.4 million. The decrease in assets during the quarter was related to cash and investments driven by decreased deposits which were primarily non-local time deposits. Loans increased by $5.8 million, or 1.8%, during the quarter to $323.4 million from prior quarter end of $317.6 million. Year-over-year loans increased $29.8 million, or 10.1%, from March 31, 2016 when loans were $293.6 million. The decrease in lower yielding cash and investments combined with an increase in higher yielding loans improved asset mix which aided earnings.

Loan growth during the quarter was driven by an increase of $2.7 million, or 3.1%, in Commercial and Industrial (C&I) loans which ended the quarter at $90.2 million, or 27.9%, of total loans compared to prior quarter that ended at $87.5, or 27.5%, of total loans. C&I loans grew year-over-year by $5.0 million or 5.9%. Commercial real estate (CRE) increased by $2.2 million, or 1.5%, for first quarter 2017 as well with most of the growth coming from owner occupied loans that grew $2.0 million. Total CRE loans as of March 31, 2017 were $162.1 million, or 50.13% of total loans, with $95.9 million, or 29.7% of these loans in owner occupied and $66.2 million, or 20.5% of total loans, in non-owner occupied. Year-over-year growth in total CRE was $15.8 million or 10.8%. Also, construction loans increased by $1.2 million or 2.7% during the quarter to $44.6 million, or 13.8% of total loans, compared to prior quarter end of $43.4 million, or 13.7% of total loans. Construction loans grew year-over-year by $7.7 million or 20.8%. Fred Johnson, the Bank's Chief Credit Officer, stated "The local economy continued to show signs of strength including loan demand which allowed the Bank to fund loans that matched our credit risk appetite. The Bank was successful in growing commercial and industrial loans which is a constant goal of the Bank."

The allowance for loan loss remained consistent at $4.4 million during the quarter and past year although, due to loan growth, the allowance to total loans decreased to 1.37% as of March 31, 2017 compared to the prior quarter end of 1.39%, and the March 31, 2016 level of 1.48%. During the quarter there were no loan losses and only routine monthly recoveries which totaled $13,000. As of March 31, 2017 the Bank had $43,000 in loans past due greater than 30 days and no loans past due greater than 90 days and still accruing interest. Non-performing assets totaled $7.4 million including $3.4 million in non-accrual loans which was made up of two relationships and $4.0 million in other real estate owned which consisted of four properties ranging in value from $183,000 to $2.8 million. 

Deposits

Total deposits at $312.8 million as of March 31, 2017 increased $32.7 million, or 11.6%, over the past year when compared to the $280.1 million as of March 31, 2016, despite a $10.9 million strategic reduction of non-local time deposits. As of March 31, 2017 non-interest bearing demand and NOW accounts totaled $121.6 million, or 38.9% of total deposits; money market and savings accounts totaled $125.2 million, or 40.0%; while time deposits totaled $66.0 million, or 21.1% of total deposits. During the past quarter, total deposits decreased $5.0 million, or 1.6%, however most of this was due to the desired $4.7 million reduction on non-local time deposits. Bob Ekblad, the Company's Chief Operating Officer stated, "We are focused on building local deposits through relationships with clients in the communities in which we operate, and due to our successes with local deposit growth, over this year we had a number of non-local higher cost time deposits mature that we did not need to renew. And this trend improved our deposit mix by reducing time deposits as a percentage of total deposits to 21.1% at the end of this quarter compared to 27.0% at this time last year." 

As of March 31, 2017, the Bank had $2.2 million in reciprocal brokered deposits, a $5.0 million wholesale brokered time deposit, and other non-traditional out-of-area time deposits of $12.1 million, which in aggregate were $19.3 million. 

Borrowings, Equity and Capital

The Company has two separate junior subordinated debentures utilized as capital at the Bank and in aggregate remained unchanged at $8.2 million. Both debentures have variable rates tied to the three-month LIBOR; one for $3.1 million with a spread of 3.15% and a current rate of 4.30% and the other for $5.1 million with a spread of 1.90% and a current rate of 3.03%. Federal Home Loan Bank (FHLB) borrowings also remained unchanged and were $21.6 million as of March 31, 2017. FHLB borrowings consisted of eight notes with a weighted average cost of 2.68% and rates ranging from 1.08% to 3.28% while maturities range from December 2017 to April 2020. 

At the Bank level, the leverage ratio increased during the quarter to 11.73% from 11.48% at year-end 2016 which was due to growth in equity through retained earnings and a slight reduction in total assets. The reduction in assets was primarily in cash and unpledged securities which are risk weighted lower than loans which grew during the quarter. The additional loan activity caused a decrease in tier 1 risk-based capital and total risk based capital as of March 31, 2017 to 11.78% and 13.00%, respectively compared to year end 2016 when they were 11.95% and 13.20%, respectively. These capital ratios continue to be above amounts required for the Bank to be considered "well-capitalized" according to traditional regulatory standards. The Company's equity grew from retained earnings during the quarter to $37.5 million as of March 31, 2017, up $938,000 from the year-end 2016 amount of $36.5 million and up year-over-year by $3.5 million or 10.3%. 

About Premier Commercial Bancorp:

Information about the Company's stock may be obtained through the over-the-counter 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 Sheets
Unaudited
(amounts in 000s, except per share data and ratios)
                           
    March 31,                
    2017     2016     % Change
2017 vs. 2016
  December 31,
2016
    % Change
Quarter
                                 
ASSETS                                
  Cash & due from banks   $ 21,063     $ 26,104     -19.3%   $ 29,346     -28.2%
  Investment securities - available for sale     22,615       17,466     29.5%     23,589     -4.1%
  Investments - other     2,857       3,250     -12.1%     2,815     1.5%
                                   
  Gross loans     323,358       293,600     10.1%     317,604     1.8%
  Allowance for loan losses     (4,428 )     (4,331 )   2.2%     (4,414 )   0.3%
    Net loans     318,930       289,269     10.3%     313,190     1.8%
                                   
  Other real estate owned     4,042       4,080     -0.9%     4,042     0.0%
  Other assets     17,590       14,989     17.4%     17,430     0.9%
                                   
    Total Assets   $ 387,097     $ 355,158     9.0%   $ 390,412     -0.8%
                                   
LIABILITIES                                
  Deposits   $ 312,750     $ 280,127     11.6%   $ 317,701     -1.6%
  Repurchase agreements     2,326       6,980     -66.7%     1,688     37.8%
  FHLB borrowings     21,550       21,550     0.0%     21,550     0.0%
  Junior subordinated debentures     8,248       8,248     0.0%     8,248     0.0%
  Other liabilities     4,773       4,293     11.2%     4,713     1.3%
    Total Liabilities     349,647       321,198     8.9%     353,900     -1.2%
                                 
STOCKHOLDERS' EQUITY     37,450       33,960     10.3%     36,512     2.6%
                                     
    Total Liabilities and Stockholders' Equity   $ 387,097     $ 355,158     9.0%   $ 390,412     -0.8%
                                 
Shares outstanding at end-of-period     5,851,487       5,840,609           5,840,609      
Book value per share   $ 6.40     $ 5.81         $ 6.25      
Allowance for loan losses to total loans     1.37%       1.48%           1.39%      
Non-performing assets (non-accrual loans & OREO)   $ 7,439     $ 7,040         $ 7,523      
                                 
Bank Tier 1 leverage ratio     11.73%       11.74%           11.48%      
Bank Tier 1 risk-based capital ratio     11.78%       11.95%           11.95%      
Bank Total risk-based capital ratio     13.00%       13.20%           13.20%      
                                 
                                 
                           
Consolidated Statements of Net Income
Unaudited
(amounts in 000s, except per share data and ratios)
                           
    Three Months Ended         Three Months Ended
    3/31/2017     3/31/2016     % Change   12/31/2016     % Change
INTEREST INCOME                                
  Loans   $ 4,133     $ 3,873     6.7%   $ 4,140     -0.2%
  Investments - available for sale     119       93     28.0%     104     14.4%
  Federal funds sold and other     49       50     -2.0%     39     25.6%
    Total interest income     4,301       4,016     7.1%     4,283     0.4%
                                   
INTEREST EXPENSE                                
  Deposits     297       279     6.5%     305     -2.6%
  Repurchase agreements and federal funds purchased     1       3     -66.7%     1     0.0%
  FHLB borrowings     144       146     -1.4%     148     -2.7%
  Junior subordinated debentures     69       61     13.1%     67     3.0%
    Total interest expense     511       489     4.5%     521     -1.9%
                                 
NET INTEREST INCOME BEFORE LOAN LOSS PROVISION     3,790       3,527     7.5%     3,762     0.7%
                                 
PROVISION FOR LOAN LOSSES     -       -     0.0%     -     0.0%
                                 
NET INTEREST INCOME AFTER LOAN LOSS PROVISION     3,790       3,527     7.5%     3,762     0.7%
                                 
NON-INTEREST INCOME     214       170     25.9%     213     0.5%
                                 
NON-INTEREST EXPENSE     2,530       2,594     -2.5%     2,425     4.3%
                                 
INVESTMENTS- REALIZED GAINS / (LOSSES)     -       -     0.0%     -     0.0%
OREO VALUATION ADJ. & GAINS/(LOSSES) ON SALES - NET     -       112     -100.0%     10     -100.0%
                                 
INCOME BEFORE PROVISION FOR INCOME TAXES     1,474       1,215     21.3%     1,560     -5.5%
                                 
PROVISION FOR INCOME TAXES     535       440     21.6%     564     -5.1%
                                 
NET INCOME   $ 939     $ 775     21.2%   $ 996     -5.7%
                                 
Earnings per share - Basic   $ 0.16     $ 0.13         $ 0.17      
                                 
Earnings per share - Diluted   $ 0.16     $ 0.13         $ 0.17      
                                 
Return on average equity     10.25%       9.24%           10.92%      
Return on average assets     0.99%       0.89%           1.03%      
Net interest margin     4.30%       4.32%           4.18%      
Efficiency ratio     63.2%       70.2%           61.0%      
                                 

Contact Information