SOURCE: Premier Commercial Bancorp

Premier Commercial Bancorp

January 28, 2016 16:05 ET

Premier Commercial Bancorp Reports Full Year and Fourth Quarter 2015 Results

HILLSBORO, OR--(Marketwired - Jan 28, 2016) -  Premier Commercial Bancorp (OTC PINK: PRCB), a single bank holding company for Premier Community Bank based in Hillsboro, Oregon, today reported net income of $2.8 million, or $0.48 per diluted share, for the full year of 2015 compared to net income of $587,000, or $0.10 per diluted share, for 2014. Net income for fourth quarter 2015 was $896,000, or $0.15 per diluted share, compared to $738,000, $607,000, and $529,000, or $0.13, $0.10, and $0.09 per diluted share for the third, second, and first quarters of 2015, respectively. 

Highlights for fourth quarter and full-year 2015 included:

  • Deposit growth of $26.5 million, or 10.7%, for 2015 supported continued loan growth.
  • Loans of $289.1 million at year-end increased $31.5 million, or 12.2%, during 2015.
  • Strategic initiatives implemented during 2014 and 2015 to reduce high-cost borrowings resulted in significantly decreased interest expense for 2015, which at $2.0 million for the year, was a $1.1 million reduction, or a 35.9% decrease, compared to the $3.1 million of interest expense for 2014.
  • As the result of increased loans and reductions of high-cost borrowings, net interest income at $12.8 million for 2015 increased $1.7 million, or 15.7%, compared to the $11.1 million for 2014.
  • ROE and ROA for full-year 2015 were 8.71% and 0.81%, respectively.
  • Net interest margin was 4.02% for full-year 2015 compared to 3.54% for 2014.
  • Quarterly profitability metrics continue to strengthen:
    • ROE of 10.81%, 9.13%, 7.74%, and 6.97% for the fourth, third, second, and first quarters of 2015, respectively.
    • ROA of 1.02%, 0.84%, 0.71%, and 0.65% for the fourth, third, second, and first quarters of 2015, respectively.
    • Net interest margin was 4.20% for fourth quarter 2015 compared to 3.93%, 3.92%, and 4.06% for the prior three sequential quarters.
    • Efficiency ratio was 65.2% for fourth quarter 2015 compared to 68.3%, 74.3%, and 76.5% for the prior three sequential quarters.
  • Successfully converted the Newberg loan production office to a full-service branch.

Regarding the Company's markets and its recent financial performance, Rick A. Roby, its President and CEO, stated, "Economic growth and real estate appreciation were continued drivers in our local markets and we were able to continue the process of building the Bank's loan portfolio from its excess cash reserves and investments. Our loans made to local businesses and homebuilders have added to the growth and vitality of the communities we serve while at the same time providing reasonable returns for our shareholders. During 2015, we expanded into new markets and added additional seasoned lenders. The results have been very positive, as evidenced by our recent financial results, and we expect these growth and profitability trends to continue into 2016 and beyond."

Earnings

Net income for 2015 at $2.8 million, or $0.48 per diluted share, was up significantly from the $587,000, or $0.10 per dilute share for 2014 as an improved asset mix (reductions in non-performing assets, cash, and lower-yielding securities while increasing loans), improved deposit mix, and reduction of high cost liabilities such as Federal Home Loan Bank (FHLB) borrowings and repurchase agreements during 2014 and 2015, drove a $1.7 million, or 15.7%, increase in net interest income. Adversely affecting 2014 results was a $2.0 million penalty paid to prepay $25.0 million of high cost FHLB debt, however this amount was also partially offset by a one-time $1.0 million gain on the sale of a preferred trust security that in previous years had been written down from other-than-temporary impairments. Non-interest income at $661,000 for 2015 was up 5.8% when compared to the prior year while non-interest expenses were down 1.4% for the year as reductions in problem asset related costs more than offset the increase in existing personnel costs and the expansion costs of the new branch in Newberg. And Mr. Roby further commented, "The Company's strengthened and growing balance sheet along with increased non-interest income and reduced non-interest expense drove 2015 operating results to more normalized levels that we have not necessarily seen the past several years, but indeed we do intend to see moving forward." Return on average equity and average assets for the full-year 2015 were 8.71% and 0.81%, respectively, while the efficiency ratio was 70.9%. Quarter-over-quarter results for all of 2015 showed continually improving amounts and for fourth quarter 2015, return on average equity and average assets were 10.81% and 1.02%, respectively, while the efficiency ratio also showed continued improvement and was down to 65.2%. 

Assets

Total assets at $346.5 million as of December 31, 2015 increased $22.1 million, or 6.8%, when compared to the $324.4 million as of December 31, 2014. When comparing asset categories year-over-year, most were down slightly and relatively unchanged with the exception of loans which grew $31.5 million, or 12.2%, and were at $289.1 million as of December 31, 2015 relative to the $257.6 million outstanding as of December 31, 2014. "The Bank's lending team is solid and our niches and markets served are performing well as evidenced by our credit quality and increase in outstanding loans for the period. While outstanding loans grew by over $31.5 million this past year, total new commitments exceeded over $126.0 million for the year," stated Fred Johnson, the Bank's Chief Credit Officer. The year-over-year increase came from all loan categories as the mix at year-end 2015 was consistent with year-end 2014 amounts. As of December 31, 2015 non-real estate commercial and industrial (C&I) loans were $83.9 million, or 29.0% of total loans, construction loans were $37.7 million or 13.0% of total loans, while owner-occupied commercial real estate loans were $81.9 million, or 28.3%, and non-owner-occupied commercial real estate loans were $57.3 million, or 19.8%, of total loans. Mr. Johnson concluded, "And with the addition of a couple of experienced lenders at the end of 2015 and the continued optimism in our markets, the year ahead should be another one presenting quality opportunities and continued growth." 

The Bank's allowance for loan losses remained consistent at $4.4 million as of December 31, 2015 and 2014; however with the increase in loans, the allowance as a percentage of outstanding loans decreased from 1.69% as of December 31, 2014 to 1.51% as of December 31, 2015. The Bank had no loan loss provision expense for 2015 or 2014. During 2015, the Bank had $98,000 in loan recoveries and $91,000 in loan charge-offs, or net recoveries of $7,000. For 2014, the Bank had $143,000 in loan recoveries and $1.2 million in charge-offs which were almost exclusively attributable to a single borrower in bankruptcy. 

The Bank had no past due loans at December 31, 2015 and non-performing assets (consisting of loans on nonaccrual status and other real estate owned-OREO) were $7.3 million, or 2.1% of total assets, and continued their downward trend from the $9.4 million as of December 31, 2014. At December 31, 2015 the Bank had one loan for $3.0 million in non-accrual status while OREO was $4.2 million and consisted of six properties with carrying amounts ranging from $37,000 to $2.8 million.

Deposits

"Despite the drop in total deposits over this past quarter due to the reduction of some known temporary deposits, the overall growth of core deposits throughout the Bank remains very strong. And we are especially pleased that our Newberg Office, which opened as a full service branch in January 2015, contributed to over $11.0 million of this growth," stated Bob Ekblad, the Company's Chief Financial Officer. Deposits were $273.2 million as of December 31, 2015, up $26.5 million, or 10.7%, compared to the $246.7 million as of December 31, 2014. And Mr. Ekblad commented further, "And of course our deposit focus has been, and will continue to be, on low-cost transaction accounts which improves mix and reduces the average cost of interest-bearing deposits, which decreased to 0.56% for 2015 compared to 0.61% for 2014." As of December 31, 2015, the Bank's demand deposits and NOW accounts totaled $90.8 million, or 33.2% of total deposits, while money market and savings accounts were $101.9 million and time deposits were $80.5 million, or 37.3% and 29.5%, respectively. 

As of December 31, 2015, the Bank had $2.2 million in reciprocal brokered deposits while non-traditional out-of-area time deposits were $33.0 million compared to December 31, 2014 when the Bank had no brokered deposits and non-traditional out-of-area deposits were $31.4 million. 

Repurchase Agreements, Borrowings, Equity, and Capital

During 2014 and 2015, the Bank strategically reduced its repurchase agreements by transitioning these clients into less expensive and non-collateralized transactional accounts or reciprocal deposit arrangements. Repurchase agreements at $6.3 million as of December 31, 2015 were down $11.9 million, or 65.2%, from the $18.2 million as of December 31, 2014.

In December 2014, the Bank prepaid, at a penalty of almost $2.0 million, Federal Home Loan Bank (FHLB) notes totaling $25.0 million with maturities from October 2016 to January 2017 and an average rate of 4.50%. After these prepayments, as of December 31, 2014, the Bank had $16.0 million of remaining FHLB notes that both mature in December 2017 and combined have a weighted average cost of 3.17%. During 2015, the Bank executed $5.5 million of new FHLB advances with rates and maturities ranging from 1.08% to 1.50% and February 2018 to April 2020. 

Other Borrowings as of December 31, 2014 consisted of a $1.2 million holding company note at a rate of 7.30% with a scheduled maturity of August 2016, however, during the second quarter of 2015, with a cash dividend provided by the Bank, this note, without penalty, was prepaid in full.

Bank capital continues to increase as its almost $3.0 million of net income for 2015 well exceeded the $300,000 in routine dividends to the holding company throughout the year and the special dividend of $1.2 million to pay-off the above mentioned note. With average total assets growing only modestly year-over-year, the Bank's leverage ratio also grew to 11.55% as of December 31, 2015 compared to 10.88% at December 31, 2014. However, with the significant increase in loans year-over-year ($31.5 million), the increase in the Bank's risk-weighted assets caused a reduction to the Bank's total risk-based capital ratio which was 13.28% as of December 31, 2015 compared to 14.19% as of December 31, 2014. These capital ratios continue to be above amounts required for the Bank to be considered "well-capitalized" according to traditional regulatory standards. 

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)
 
                               
    December 31,     % Change     September 30,     % Change  
    2015     2014     2015 vs. 2014     2015     Quarter  
                                     
ASSETS                                    
  Cash & due from banks   $ 21,372     $ 21,751     -1.7 %   $ 33,184     -35.6 %
  Investment securities - available for sale     18,111       23,948     -24.4 %     19,104     -5.2 %
  Investments - other     3,232       4,025     -19.7 %     3,242     -0.3 %
                                     
  Gross loans     289,128       257,624     12.2 %     278,730     3.7 %
  Allowance for loan losses     (4,369 )     (4,362 )   0.2 %     (4,334 )   0.8 %
    Net loans     284,759       253,262     12.4 %     274,396     3.8 %
                                     
  Other real estate owned     4,241       5,411     -21.6 %     4,523     -6.2 %
  Other assets     14,808       15,953     -7.2 %     15,112     -2.0 %
                                     
    Total Assets   $ 346,523     $ 324,350     6.8 %   $ 349,561     -0.9 %
                                     
LIABILITIES                                    
  Deposits   $ 273,220     $ 246,708     10.7 %   $ 277,830     -1.7 %
  Repurchase agreements     6,328       18,188     -65.2 %     5,735     10.3 %
  FHLB borrowings     21,550       16,000     34.7 %     21,550     0.0 %
  Other borrowings     -       1,247     -100.0 %     -     0.0 %
  Junior subordinated debentures     8,248       8,248     0.0 %     8,248     0.0 %
  Other liabilities     4,081       3,588     13.7 %     3,936     3.7 %
    Total Liabilities     313,427       293,979     6.6 %     317,299     -1.2 %
                                     
STOCKHOLDERS' EQUITY     33,096       30,371     9.0 %     32,262     2.6 %
    Total Liabilities and Stockholders' Equity   $ 346,523     $ 324,350     6.8 %   $ 349,561     -0.9 %
                                     
Shares outstanding at end-of-period     5,824,541       5,795,415             5,795,415        
Book value per share   $ 5.68     $ 5.24           $ 5.57        
Allowance for loan losses-to-total loans     1.51 %     1.69 %           1.55 %      
Non-performing assets (non-accrual loans & OREO)   $ 7,285     $ 9,351           $ 8,096        
                                     
Bank Tier 1 leverage ratio     11.55 %     10.88 %           11.30 %      
Bank Tier 1 risk-based capital ratio     12.03 %     12.94 %           12.14 %      
Bank Total risk-based capital ratio     13.28 %     14.19 %           13.40 %      
                                     
                                     

 

                             
Consolidated Statements of Net Income
Unaudited
(amounts in 000s, except per share data and ratios)
  
 
                             
      Twelve Months Ended            Three Months Ended       
    12/31/2015   12/31/2014   % Change     12/31/2015   9/30/2015   % Change  
INTEREST INCOME                                    
  Loans   $ 14,269   $ 13,355   6.8 %   $ 3,815   $ 3,596   6.1 %
  Investments - available for sale     397     728   -45.5 %     97     97   0.0 %
  Federal funds sold and other investments     143     103   38.8 %     36     37   -2.7 %
    Total interest income     14,809     14,186   4.4 %     3,948     3,730   5.8 %
                                     
INTEREST EXPENSE                                    
  Deposits     1,137     1,094   3.9 %     286     295   -3.1 %
  Repurchase agreements and federal funds purchased     15     32   -53.1 %     3     3   0.0 %
  FHLB borrowings     571     1,570   -63.6 %     147     147   0.0 %
  Other borrowings     51     190   -73.2 %     -     -   0.0 %
  Junior subordinated debentures     222     226   -1.8 %     57     55   3.6 %
    Total interest expense     1,996     3,112   -35.9 %     493     500   -1.4 %
                                     
NET INTEREST INCOME BEFORE LOAN LOSS PROVISION     12,813     11,074   15.7 %     3,455     3,230   7.0 %
                                     
PROVISION FOR LOAN LOSSES     -     -   0.0 %     -     -   0.0 %
                                     
NET INTEREST INCOME AFTER LOAN LOSS PROVISION     12,813     11,074   15.7 %     3,455     3,230   7.0 %
                                     
NON-INTEREST INCOME     661     625   5.8 %     168     169   -0.6 %
                                     
NON-INTEREST EXPENSE     9,547     9,686   -1.4 %     2,363     2,321   1.8 %
                                     
FHLB NOTE PREPAYMENT PENALTIES     -     (1,955 ) -100.0 %     -     -   0.0 %
INVESTMENTS- REALIZED GAINS / (LOSSES)     3     1,024   -99.7 %     -     -   0.0 %
OREO VALUATION ADJ. & GAINS/(LOSSES) ON SALES - NET     349     (311 ) -212.2 %     138     65   112.3 %
                                     
INCOME BEFORE PROVISION FOR INCOME TAXES     4,279     771   455.0 %     1,398     1,143   22.3 %
                                     
PROVISION FOR INCOME TAXES     1,509     184   720.1 %     502     405   24.0 %
                                     
NET INCOME   $ 2,770   $ 587   371.9 %   $ 896   $ 738   21.4 %
                                     
Earnings per share - Basic   $ 0.48   $ 0.10         $ 0.15   $ 0.13      
                                     
Earnings per share - Diluted   $ 0.48   $ 0.10         $ 0.15   $ 0.13      
                                     
Return on average equity     8.71 %   1.95 %         10.81 %   9.13 %    
Return on average assets     0.81 %   0.17 %         1.02 %   0.84 %    
Net interest margin     4.02 %   3.54 %         4.20 %   3.93 %    
Efficiency ratio     70.9 %   82.8 %         65.2 %   68.3 %    
                                     

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