SOURCE: Columbia Commercial Bancorp

Columbia Commercial Bancorp

July 25, 2014 17:14 ET

Premier Commercial Bancorp Reports Second Quarter 2014 Results

HILLSBORO, OR--(Marketwired - Jul 25, 2014) - Premier Commercial Bancorp, the new name for Columbia Commercial Bancorp (OTCBB: CLBC), a single bank holding company for Premier Community Bank based in Hillsboro, Oregon (the Bank), reports a net profit of $508,000 for the six months ended June 30, 2014. Relative to $671,000 for the first six months of 2013, the decrease in net income for the period was attributed to an increase in troubled asset related expenses and changes in the net gains and losses on the sale of OREO properties. Earnings per diluted share for the six months ended June 30, 2014 was $0.09 compared to $0.18 per diluted share for the same six months of 2013 due to the reduced net income for the period as well as an increase in shares outstanding during 2014 from a common stock offering in late 2013 where almost 1.8 million shares were issued. Net income for second quarter 2014 of $250,000, or $0.04 per diluted share, was down slightly from the $258,000, or $0.05 per diluted share for the first quarter of 2014. 

"Non-performing assets continue their steady decline while at the same time we are producing quality loan and core deposit growth. This growth along with an improved mix, not only strengthens both the asset and liability sides of the balance sheet but has been and will continue to bolster core earnings. The Company's equity also increased significantly over the past year from both retained earnings and a stock offering. And common equity will continue to grow further in this upcoming quarter as over $1.0 million of debt has recently been converted to common shares. The foundation of the Company is strong and the team continues to work toward additional successes," stated the Company's President and CEO, Rick A. Roby.

Earnings

Interest on earning assets was $7.0 million for the first six months of both 2014 and 2013. Increased interest income from the improvement in asset mix and increases in outstanding loans were offset by reduced loan rates from both scheduled repricings and rates on new loans relative to maturing loans and pay downs. Interest expense at $1.6 million for the first six months of 2014 was down $257,000, or 13.7%, when compared to the $1.9 million for the same period of 2013. The reduction in interest expense was directly attributable to a reduction in the amounts and rates paid on non-core deposits and repurchase agreements. Net interest income for the first six months of 2014 at $5.4 million was $270,000, or 5.3% higher than the same period for 2013. The improving net interest margin for 2014 relative to 2013 was reflective of the above changes and was 3.51% for the first six months of 2014 compared to 3.39% for 2013. Also reflected in the 2014 net interest income and margin was the collection of back interest on non-accrual loans during first quarter 2014 which resulted in a higher net interest margin for that quarter at 3.60% compared to second quarter 2014 at 3.43%. Excluding the collection of back interest on non-accrual loans, net interest margin for first quarter 2014 would have been 3.41%.

Noninterest income at $156,000 for second quarter 2014 and $153,000 for first quarter 2014, or $309,000 year-to-date, was consistent with the $300,000 for the first six months of 2013. Noninterest expense was $2.5 million for second quarter 2014 and was relatively consistent with the amount for first quarter 2014; however at $4.9 million for the first six months of 2014, noninterest expense was $431,000 higher than the amount for the same period of 2013. The increased noninterest expenses relate in part to increased personnel costs for both existing staff and strategic new hires to focus on specific product niches and new markets while the costs of managing and collecting/liquidating problem loans and OREO properties continue to exceed our expectations and budgeted amounts. Expenses related to problem loans and OREO were $140,000 and $192,000 for the first and second quarters of 2014, or $332,000 for the first six months of 2014 which was considerably higher than the $198,000 for the first six months of 2013. Moving forward it is expected these expenses will decrease as we continue to reduce the levels of both problematic loans and OREO properties. 

Assets

Total Assets as of June 30, 2014 at $335.7 million were consistent with the 2013 year-end amount but were up $10.0 million, or 3.1%, when compared to the $325.7 million a year ago. Outstanding loans have steadily increased over the past year from $246.7 million as of June 30, 2013 to $251.5 million as of June 30, 2014. Loans secured by commercial buildings have increased $7.3 million, to $114.6 million, or 45.6% of the total loan portfolio. Loans secured by multi-family dwellings have also increased as they are now over $7.0 million compared to this time last year when they were $1.4 million. Non-real estate commercial and industrial (C&I) loans in aggregate have remained relatively consistent over the past year and were $75.2 million, or 29.9%, of the Bank's total loans as of June 30, 2014. Real estate acquisition, development, and construction loans at $30.4 million, or 12.1% of the total loan portfolio as of June 30, 2014, were down almost $3.0 million when compared to the $33.3 million as of June 30, 2013. "This reduction over the past year in real estate acquisition, development, and construction loans was primarily the result of eliminating the remnants from the economic downturn and now this portfolio is performing very well with no delinquencies and minimal adverse classifications," states Fred Johnson, the Company's Chief Credit Officer. 

Consistent with March 31, 2014 and December 31, 2013, as of June 30, 2014 the Bank had no loans that were past due over 30 days and still accruing interest. 

For the first six months of 2014, the Bank had $129,000 in loan recoveries relative to $99,000 in charge-offs, or $30,000 in net recoveries. For the full-year of 2013, the Bank had $309,000 in loan recoveries relative to $290,000 in charge-offs, or net recoveries of $19,000. The allowance for loan losses as of June 30, 2014 at $5.5 million, or 2.17% of total loans, was consistent with the December 31, 2013 amounts, but below the $6.2 million, or 2.51% of loans, at this time last year due to the Bank's $750,000 reverse loan loss provision taken during fourth quarter 2013. The Bank had no loan loss provision expense for the first six months of 2014 and none for the full twelve months of 2013. 

Non-performing assets consist of loans on nonaccrual status and other real estate owned (OREO) which combined to $11.2 million, or 3.32% of total assets as of June 30, 2014 compared to $13.1 million, or 3.94% of total assets, as of March 31, 2014 and compared to $15.1 million, or 4.51% of total assets as of December 31, 2013. As of June 30, 2014 the Bank had $5.6 million in loans on nonaccrual status which consisted of four relationships (one borrower accounted for $5.0 million) and OREO was $5.6 million which consisted of 10 projects/properties with carrying amounts ranging from $45,000 to $2.9 million.

To improve earnings on excess liquidity, over the past year the Company's investments have grown by $8.8 million, or 25.5%, to $43.5 million. The growth in investments has been in short-duration securities to minimize interest rate risk and to provide cash flows for continued loan growth.

Deposits and Repurchase Agreements

Total deposits at $236.8 million as of June 30, 2014 continue to increase and were up $2.7 million, or 1.1%, relative to the $234.1 million as of December 31, 2013 and increased $8.6 million, or 3.8%, when compared to the $228.2 million as of June 30, 2013. "The Bank continues to be pleased with its core deposit growth initiatives which have resulted in almost $18.5 million of growth over the past year as during this same period the Bank's reliance on brokered and other non-traditional deposits decreased by nearly $10.0 million," states the Company's Chief Financial Officer, Bob Ekblad. As of June 30, 2014 the Bank had no brokered deposits and $37.2 million of non-traditional out-of-area deposits compared to June 30, 2013 when brokered deposits were $2.3 million and other non-traditional out-of-area deposits were $44.8 million. 

Repurchase agreements are interest-bearing collateralized accounts typically utilized by larger clients for earnings and protection of excess funds. As these funds are more expensive and less beneficial than traditional deposits, the Bank has strategically been working to reduce the amounts held in these accounts; and as a result, the amount of client repurchase accounts as of June 30, 2014 at $13.8 million were down $5.0 million, or 26.6% relative to the $18.8 million as of June 30, 2013.

Borrowings, Equity and Capital

Within "Other Borrowings" as of June 30, 2014, the Company had $1,095,000 of 8.50% convertible notes that mature in December 2014. Recently the Company prepared and presented these note holders a special offering to convert the principal amount of their notes, plus interest that would have been earned through maturity, to common stock at $4.40 per share. Over these past few weeks of July 2014, substantially all note holders have accepted the conversion offering and the Company has retired $1,045,000 of these convertible notes and issued 247,595 common shares.

With continued earnings and $6.1 million in net proceeds from a stock offering during third quarter 2013, stockholders' equity for the Company at $29.6 million as of June 30, 2014 increased $7.7 million, or 35.4%, when compared to the $21.9 million as of June 30, 2013. At the Bank, capital levels showed a corresponding increase from retained earnings, a $4.4 million capital injection from the Company as a result of the third quarter 2013 stock offering, and reductions in disallowed assets for regulatory capital measurements. The Bank's leverage ratios and total risk-based capital ratios as of June 30, 2014 were 11.12% and 14.50%, respectively, compared to 10.65% and 14.23% as of December 31, 2013 and 9.41% and 12.59% as of June 30, 2013. 

About Premier Commercial Bancorp:

In April 2014 the shareholders of Columbia Commercial Bancorp approved a proposal to amend its articles of incorporation to change its name to Premier Commercial Bancorp, which is reflective of the new name for its primary operating subsidiary, Premier Community Bank. Information about the Company's stock may be obtained through the OTCQB marketplace at www.otcmarkets.com. Premier Commercial Bancorp's stock symbol is currently CLBC; however this is scheduled to change soon to a ticker more reflective of the Company's new name.

Premier 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 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)  
                               
    June 30,     % Change
2014 vs. 2013
    December 31,
2013
    % Change
Year-to-Date
 
    2014     2013              
                                     
ASSETS                                    
  Cash & due from banks   $ 25,348     $ 28,230     -10.2 %   $ 27,602     -8.2 %
  Federal funds sold     -       -     0.0 %     -     0.0 %
  Investment Securities - Available for Sale     39,376       32,454     21.3 %     39,471     -0.2 %
  Investments - Other     4,085       2,188     86.7 %     2,149     90.1 %
                                       
  Gross loans     251,453       246,663     1.9 %     248,434     1.2 %
  Allowance for loan losses     (5,452 )     (6,183 )   -11.8 %     (5,422 )   0.6 %
    Net loans     246,001       240,480     2.3 %     243,012     1.2 %
                                       
  Other real estate owned     5,568       6,836     -18.5 %     7,598     -26.7 %
  Other assets     15,338       15,532     -1.2 %     15,294     0.3 %
                                       
    Total Assets   $ 335,716     $ 325,720     3.1 %   $ 335,126     0.2 %
                                     
LIABILITIES                                    
  Deposits   $ 236,771     $ 228,190     3.8 %   $ 234,082     1.1 %
  Repurchase agreements     13,830       18,848     -26.6 %     16,530     -16.3 %
  Federal funds purchased     -       -     0.0 %     -     0.0 %
  FHLB borrowings     41,000       41,000     0.0 %     41,000     0.0 %
  Other borrowings     2,405       2,523     -4.7 %     2,465     -2.4 %
  Junior subordinated debentures     8,248       8,248     0.0 %     8,248     0.0 %
  Other liabilities     3,841       5,027     -23.6 %     4,355     -11.8 %
    Total Liabilities     306,095       303,836     0.7 %     306,680     -0.2 %
                                     
STOCKHOLDERS' EQUITY     29,621       21,884     35.4 %     28,446     4.1 %
    Total Liabilities and Stockholders' Equity   $ 335,716     $ 325,720     3.1 %   $ 335,126     0.2 %
                                     
Shares outstanding at end-of-period     5,535,974       3,775,752             5,535,974        
Book value per share   $ 5.35     $ 5.80           $ 5.14        
Allowance for loan losses to total loans     2.17 %     2.51 %           2.18 %      
Non-performing assets (non-accrual loans & OREO)   $ 11,171     $ 14,041           $ 15,136        
                                     
Bank Tier 1 leverage ratio     11.12 %     9.41 %           10.65 %      
Bank Tier 1 risk-based capital ratio     13.24 %     11.33 %           12.97 %      
Bank Total risk-based capital ratio     14.50 %     12.59 %           14.23 %      
   
   
   
Consolidated Statement of Operations   
Unaudited   
  (amounts in 000s, except per share data and ratios)  
                                     
    Three Months Ended           Six Months Ended        
    6/30/2014     3/31/2014     % Change     6/30/2014     6/30/2013     % Change  
INTEREST INCOME                                            
  Loans   $ 3,222     $ 3,326     -3.1 %   $ 6,548     $ 6,669     -1.8 %
  Investments     196       195     0.5 %     391       260     50.4 %
  Federal funds sold and other     19       16     18.8 %     35       32     9.4 %
    Total interest income     3,437       3,537     -2.8 %     6,974       6,961     0.2 %
                                             
INTEREST EXPENSE                                            
  Deposits     283       285     -0.7 %     568       783     -27.5 %
  Repurchase agreements and federal funds purchased     7       9     -22.2 %     16       43     -62.8 %
  FHLB borrowings     412       408     1.0 %     820       821     -0.1 %
  Other borrowings     49       48     2.1 %     97       100     -3.0 %
  Junior subordinated debentures     55       62     -11.3 %     117       128     -8.6 %
    Total interest expense     806       812     -0.7 %     1,618       1,875     -13.7 %
                                             
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES     2,631       2,725     -3.4 %     5,356       5,086     5.3 %
                                             
PROVISION FOR LOAN LOSSES     -       -     0.0 %     -       -     0.0 %
                                             
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES     2,631       2,725     -3.4 %     5,356       5,086     5.3 %
                                             
NON-INTEREST INCOME     156       153     2.0 %     309       300     3.0 %
                                             
NON-INTEREST EXPENSE     2,473       2,440     1.4 %     4,913       4,482     9.6 %
                                             
OREO VALUE ADJUSTMENTS & GAINS/(LOSSES) ON SALES - NET     47       (64 )   -173.4 %     (17 )     88     -119.3 %
                                             
INCOME BEFORE PROVISION FOR INCOME TAXES     361       374     -3.5 %     735       992     -25.9 %
                                             
PROVISION FOR INCOME TAXES     111       116     -4.3 %     227       321     -29.3 %
                                             
NET INCOME   $ 250     $ 258     -3.1 %   $ 508     $ 671     -24.3 %
                                             
Earnings per share - Basic   $ 0.04     $ 0.05           $ 0.09     $ 0.18        
                                             
Earnings per share - Diluted   $ 0.04     $ 0.05           $ 0.09     $ 0.18        
                                             
Return on average equity     3.39 %     3.62 %           3.50 %     6.17 %      
Return on average assets     0.30 %     0.31 %           0.31 %     0.41 %      
Net interest margin     3.43 %     3.60 %           3.51 %     3.39 %      
Efficiency ratio     88.7 %     84.8 %           86.7 %     83.2 %      

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