SOURCE: Premier Commercial Bancorp

Premier Commercial Bancorp

January 26, 2017 16:00 ET

Premier Commercial Bancorp Reports Full Year and Fourth Quarter 2016 Results

HILLSBORO, OR--(Marketwired - Jan 26, 2017) - Premier Commercial Bancorp (OTC PINK: PRCB), a single bank holding company for Premier Community Bank based in Hillsboro, Oregon, today reported net income of $3.5 million, or $0.60 per diluted share, for the twelve months ended December 31, 2016, a 27.8% increase over the net income of $2.8 million, or $0.48 per diluted share, for the same twelve month period during 2015. Net income for fourth quarter 2016 of $1.0 million, or $0.17 per diluted share, was the same as third quarter 2016, and was up considerably from the $756,000 and $775,000, or $0.13 per diluted share for each of the second and first quarters of 2016.

Highlights for the period included:

  • Loans increased $28.5 million, or 9.8%, during the year to $317.6 million as of December 31, 2016.
  • Loan quality remains strong and despite growth, no loan loss provision was taken for 2016 or 2015.
  • Deposits grew $44.5 million for 2016 which fully funded increases in loans, investments, and other assets during the year.
  • Retained profits for 2016 supported the strong asset growth of $43.9 million during the year, as regulatory capital ratios decreased only slightly and remain well above traditional regulatory standards for "well-capitalized."
  • ROE and ROA for the full-year 2016 were 10.11% and 0.97%, respectively; while for fourth quarter 2016 ROE and ROA were 10.92% and 1.03%.
  • Net interest margin increased 28 basis points to 4.30% for 2016 when compared to the prior year and was due primarily to an improved asset mix.
  • Efficiency ratio at 64.9% for 2016 improved when compared to the 70.9% for 2015 with significant improvements in the latter half of 2016 down to 61.0% and 60.8% for the fourth and third quarters of 2016, respectively.

"The Company continued its momentum with its second consecutive quarter of million dollar net profits. Asset growth and an improved mix have allowed the Company to become more efficient and thrive as the economic environment in which we operate has strengthened and grown. Our earnings for 2016 have supported the growth during the year and have set a strong foundation for continued growth and profitability into 2017," stated Rick A. Roby, the Company's President and CEO.

Earnings

Net income of $3.5 million, or $0.60 per diluted share for 2016, was an increase of $769,000 or 27.8% from 2015 which was $2.8 million or $0.48 per diluted share. Earnings were driven by a $1.9 million, or 12.6%, increase over prior year on interest income from earning assets to $16.7 million for 2016 while year-over-year interest expense was relatively unchanged at $2.0 million. As a result, net interest income rose to $14.7 million for 2016, a $1.8 million, or 14.4%, increase over the $12.8 million for 2015. Non-interest income increased $80,000, or 12.1%, in 2016 to $741,000 and non-interest expense increased $442,000, or 4.6%, in 2016 which was driven primarily by increased employee related costs, professional fees and regulatory.

Jason Wessling, the Company's Chief Financial Officer, regarding earnings growth stated, "Earnings for the year were primarily driven by loan growth but were also aided by an improved net interest margin which increased 28 basis points to 4.30% for 2016 compared to the 4.02% for 2015. Over the past year, an improved asset mix contributed to 18 basis points of the increase in net interest margin while the increase in loan yields by 8 basis points and a reduction in interest costs by 2 basis points accounted for the other 10 basis point change."

Net interest margin at 4.18% for fourth quarter 2016 decreased when compared to the 4.41% for third quarter 2016 due to the recognition of $114,000 of previously unrecognizable interest income on a non-performing loan that paid off during the third quarter. The increase of low yielding excess cash during fourth quarter 2016 also had a negative impact on net interest margin for the quarter as this excess cash caused the yield on earning assets to decrease to 4.76% for fourth quarter compared to 5.00%, 4.87%, and 4.92% for third, second, and first quarters of 2016, respectively.

The Company's return on equity increased to 10.11% for 2016 compared to 8.71% for the same twelve months of 2015 and return on assets increased to 0.97% for 2016 relative to 0.81% in 2015. For fourth quarter 2016 the Company's return on equity was 10.92% and return on assets was 1.03%. The Company's efficiency ratio improved to 64.9% for the full-year 2016 when compared to the 70.9% for 2015; and the fourth and third quarter 2016 efficiency ratios of 61.0% and 60.8%, respectively, were considerably lower than the earlier second and first quarters of 2016 at 68.1%, and 70.2%, respectively.

Assets

Total assets grew by $43.9 million, or 12.7%, to $390.4 million as of December 31, 2016 compared to $346.5 million as of December 31, 2015. Strong growth in local deposits funded loan growth of $28.5 million or 9.8% during 2016, funded additional investments in available-for-sale securities of $5.5 million, or a 30.2% increase, and resulted in increased cash of $8.0 million when compared to the 2015 year-end amounts. Loan growth was primarily driven by commercial real estate (CRE) which increased $20.6 million or 14.8% of which $12.0 million was owner-occupied and $8.6 million was non-owner occupied CRE. As of December 31, 2016 owner occupied and non-owner occupied CRE loans were $93.9 million and $66.0 million, respectively. Construction Loans increased $5.7 million or 15.0% to $43.4 million and non-real estate commercial and industrial (C&I) loans grew by $3.6 million or 4.3% to $87.5 million at year-end 2016. In total, the loan portfolio as of December 31, 2016 was 29.6% owner-occupied CRE loans, 20.8% non-owner occupied CRE loans, 27.5% C&I loans, 13.7% construction loans, and 8.4% other loans.

"The loan portfolio experienced solid growth in 2016 as the economic and interest rate environments provided opportunities to grow loans in our established markets as well as our newest market area in Newberg. The Portland Metro area real estate market has been consistently growing and rising in value which provided opportunities in this past year and will provide additional opportunities for 2017. As well, the Bank remains focused on the development of non-real estate lending to capture opportunities across business segments maintaining the diversity of our portfolio," stated Fred Johnson, the Company's Chief Credit Officer.

As of December 31, 2016 the allowance for loan loss was $4.4 million which was consistent with prior quarter and prior year-end amounts. Over the past 12 months the Bank had charge-offs of $67,000 and recoveries of $112,000, or net recoveries of $45,000. During the same twelve month period of 2015, the Bank had charge-offs of $91,000 and recoveries of $98,000, or net recoveries of $7,000. Despite $60.0 million in loan growth during the past two years, net recoveries and improving loan metrics have allowed the Bank not to take a loan loss provision for either 2016 or 2015. The increased amount of loans outstanding has decreased the allowance for loan losses as a percentage of outstanding loans to 1.39% as of December 31, 2016 from 1.41% as of September 30, 2016 and down from 1.51% as of December 31, 2015.

The Bank had no past due loans while non-performing assets (consisting of loans in nonaccrual status and other real estate owned-OREO) were $7.5 million, or 1.93% of total assets, as of December 31, 2016. Non-performing assets consisted of two loan relationships in non-accrual status totaling $3.5 million and OREO of $4.0 million which consisted of four properties ranging in value from $183,000 to $2.8 million.

Deposits

Total deposits at $317.7 million as of December 31, 2016, grew $44.5 million, or 16.3%, over the past twelve months, and Bob Ekblad, the Company's Chief Operating Officer stated, "While overall deposit growth for the year was strong, what was even more impressive was the team's success at growing local deposits which were primarily low cost transaction accounts. These efforts not only supported loan and investment growth throughout 2016, but also facilitated in reducing higher-cost non-traditional out-of-area time deposits by $11.1 million during the year." As of December 31, 2016, demand deposits and NOW accounts totaled $123.0 million, or 38.7%, of the Company's total deposits and increased $32.2 million, or 35.5%, over the year when compared to the $90.8 million as of December 31, 2015. Money market and savings accounts grew $23.0 million, or 22.6%, during 2016 to $124.9 million as of December 31, 2016 at which time they were 39.3% of total deposits while higher cost time deposits decreased $10.7 million to $69.8 million and were 22.0% of total deposits at year-end 2016 compared to year-end 2015 when time deposits were 29.5% of the Bank's total deposits.

As of December 31, 2016, 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 $16.9 million, which in aggregate were $24.1 million. These were down $11.1 million, or 31.5%, from the December 31, 2015 aggregate amount of $35.2 million when the Bank had $2.2 million in reciprocal brokered deposits, no wholesale time deposits, and $33.0 million in other non-traditional out-of-area time deposits.

Borrowings, Equity and Capital

As part of a strategic initiative to reduce higher cost fundings, repurchase agreements were down $4.6 million, or 73.3%, for the year and were $1.7 million as of December 31, 2016 compared to $6.3 million at the 2015 year-end. Federal Home Loan Bank (FHLB) borrowings have remained unchanged over the past year and were $21.6 million as of December 31, 2016. 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. The Company's junior subordinated debentures, utilized as capital at the Bank, remain unchanged at $8.2 million as of December 31, 2016. The Company has two separate junior subordinated debentures, both with variable rates tied to the three-month LIBOR; one for $3.1 million with a spread of 3.15% and a current rate of 4.01% and the other for $5.1 million with a spread of 1.90% and a current rate of 2.86%.

Equity grew from retained earnings during the year to $36.5 million as of December 31, 2016, up $3.4 million from the prior year-end amount of $33.1 million. The retained earnings resulted in higher capital and supported most of the $43.9 million, or 12.7%, increase in assets as the year-over-year decrease in regulatory capital ratios was minimal. The Bank's Total Risk-Based Capital Ratio at 13.20% and the Leverage Ratio at 11.48% as of December 31, 2016 decreased only slightly from the 13.28% and 11.55% as of December 31, 2015, respectively. 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
2016 vs. 2015
 
 
 
 
September 30,
2016
 
 
% Change
Quarter
 
 
 
 
 
 
 
 
2016   2015
                                       
ASSETS                                      
  Cash & due from banks $ 29,346   $ 21,372     37.3 %   $ 24,550     19.5 %      
  Investment securities - available for sale   23,589     18,111     30.2 %     19,848     18.8 %      
  Investments - other   2,815     3,232     -12.9 %     2,980     -5.5 %      
                                         
  Gross loans   317,604     289,128     9.8 %     310,488     2.3 %      
  Allowance for loan losses   (4,414 )   (4,369 )   1.0 %     (4,389 )   0.6 %      
    Net loans   313,190     284,759     10.0 %     306,099     2.3 %      
                                         
  Other real estate owned   4,042     4,241     -4.7 %     4,042     0.0 %      
  Other assets   17,430     14,808     17.7 %     17,028     2.4 %      
                                         
    Total Assets $ 390,412   $ 346,523     12.7 %   $ 374,547     4.2 %      
                                       
LIABILITIES                                      
  Deposits $ 317,701   $ 273,220     16.3 %   $ 302,240     5.1 %      
  Repurchase agreements   1,688     6,328     -73.3 %     2,010     -16.0 %      
  FHLB borrowings   21,550     21,550     0.0 %     21,550     0.0 %      
  Other borrowings   -     -     0.0 %     -     0.0 %      
  Junior subordinated debentures   8,248     8,248     0.0 %     8,248     0.0 %      
  Other liabilities   4,713     4,081     15.5 %     4,737     -0.5 %      
    Total Liabilities   353,900     313,427     12.9 %     338,785     4.5 %      
                                       
STOCKHOLDERS' EQUITY   36,512     33,096     10.3 %     35,762     2.1 %      
    Total Liabilities and Stockholders' Equity $ 390,412   $ 346,523     12.7 %   $ 374,547     4.2 %      
                                       
Shares outstanding at end-of-period   5,840,609     5,824,541             5,840,609              
Book value per share $ 6.25   $ 5.68           $ 6.12              
Allowance for loan losses to total loans   1.39 %   1.51 %           1.41 %            
Non-performing assets (non-accrual loans & OREO) $ 7,523   $ 7,285           $ 7,579              
                                       
Bank Tier 1 leverage ratio   11.48 %   11.55 %           11.63 %            
Bank Tier 1 risk-based capital ratio   11.95 %   12.03 %           11.84 %            
Bank Total risk-based capital ratio   13.20 %   13.28 %           13.09 %            
                                       
                                       
                                       
Consolidated Statements of Net Income  
Unaudited  
(amounts in 000s, except per share data and ratios)  
                               
  Twelve Months Ended           Three Months Ended        
  12/31/2016   12/31/2015     % Change     12/31/2016   9/30/2016     % Change  
INTEREST INCOME                                      
  Loans $ 16,149   $ 14,269     13.2 %   $ 4,140   $ 4,240     -2.4 %
  Investments - available for sale   367     397     -7.6 %     104     82     26.8 %
  Federal funds sold and other   154     143     7.7 %     39     38     2.6 %
    Total interest income   16,670     14,809     12.6 %     4,283     4,360     -1.8 %
                                       
INTEREST EXPENSE                                      
  Deposits   1,159     1,137     1.9 %     305     297     2.7 %
  Repurchase agreements and federal funds purchased   9     15     -40.0 %     1     2     -50.0 %
  FHLB borrowings   586     571     2.6 %     148     147     0.7 %
  Other borrowings   -     51     -100.0 %     -     -     0.0 %
  Junior subordinated debentures   255     222     14.9 %     67     64     4.7 %
    Total interest expense   2,009     1,996     0.7 %     521     510     2.2 %
                                       
NET INTEREST INCOME BEFORE LOAN LOSS PROVISION   14,661     12,813     14.4 %     3,762     3,850     -2.3 %
                                       
PROVISION FOR LOAN LOSSES   -     -     0.0 %     -     -     0.0 %
                                       
NET INTEREST INCOME AFTER LOAN LOSS PROVISION   14,661     12,813     14.4 %     3,762     3,850     -2.3 %
                                       
NON-INTEREST INCOME   741     661     12.1 %     213     182     17.0 %
                                       
NON-INTEREST EXPENSE   9,989     9,547     4.6 %     2,425     2,452     -1.1 %
                                       
INVESTMENTS- REALIZED GAINS / (LOSSES)   -     3     -100.0 %     -     -     0.0 %
OREO VALUATION ADJ. & GAINS/(LOSSES) ON SALES - NET   139     349     -60.2 %     10     17     -41.2 %
                                       
INCOME BEFORE PROVISION FOR INCOME TAXES   5,552     4,279     29.7 %     1,560     1,597     -2.3 %
                                       
PROVISION FOR INCOME TAXES   2,013     1,509     33.4 %     564     585     -3.6 %
                                       
NET INCOME $ 3,539   $ 2,770     27.8 %   $ 996   $ 1,012     -1.6 %
                                       
Earnings per share - Basic $ 0.60   $ 0.48           $ 0.17   $ 0.17        
                                       
Earnings per share - Diluted $ 0.60   $ 0.48           $ 0.17   $ 0.17        
                                       
Return on average equity   10.11 %   8.71 %           10.92 %   11.34 %      
Return on average assets   0.97 %   0.81 %           1.03 %   1.08 %      
Net interest margin   4.30 %   4.02 %           4.18 %   4.41 %      
Efficiency ratio   64.9 %   70.9 %           61.0 %   60.8 %      
                                       

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