SOURCE: Premier Commercial Bancorp

Premier Commercial Bancorp

July 23, 2015 16:00 ET

Premier Commercial Bancorp Reports Second Quarter 2015 Results

HILLSBORO, OR--(Marketwired - Jul 23, 2015) - Premier Commercial Bancorp (OTCBB: PRCB), a single bank holding company for Premier Community Bank based in Hillsboro, Oregon, today reported net income of $1.1 million, or $0.19 per diluted share, for the six months ended June 30, 2015 compared to net income of $508,000, or $0.09 per diluted share, for the same six month period in 2014. Net income for second quarter 2015 was $607,000, or $0.10 per diluted share, compared to $529,000, or $0.09 per diluted share, for first quarter 2015.

Highlights year-to-date and compared to last year included:

  • Outstanding loans at $272.6 million as of June 30, 2015 increased $15.0 million for the first six months of 2015 and increased $21.1 million since this time last year.
  • Deposits at $277.5 million grew $30.8 million for the first six months of 2015 and have grown $40.7 million since this time last year.
  • Net interest margin for the first six months of 2015 increased to 4.00% compared to 3.51% for the first six months of 2014.
  • ROE and ROA for the first six months of 2015 were 7.36% and 0.68%, respectively.
  • Net income for the first six months of 2015 at $1.1 million increased 123.6% when compared to the $508,000 for the same period of 2014, which was obtained through continued increases in earning assets and reductions in higher cost borrowings.

"Our outstanding team of seasoned professional bankers continue to generate excellent loan and core deposit growth within our markets in and around the Portland, Oregon MSA. A positive overall business environment along with renewed real estate markets continues to create opportunities for us now and we anticipate these growth trends to continue for the rest of this year and into 2016. And as evident by this year's financial performance, this momentum in growth has resulted in continued increases to our earnings," stated Rick A. Roby, the Company's President and CEO. 

Earnings

Net income at $1.1 million grew $628,000 for the first six months of 2015 when compared to the $508,000 for the first six months of 2014. This growth in earnings was driven primarily by an increase in net interest income. At $6.1 million, net interest income grew $772,000, or 14.4% for the first six months of 2015 compared to the $5.4 million for the same six month period of 2014. Increased loans and a reduction in non-performing assets drove a $157,000, or 2.3%, increase to earnings on assets for the first six months of 2015 compared to 2014 while a considerable reduction in higher cost borrowings during the last half of 2014 reduced total interest expense by $615,000, or 38.0% for the first six months of 2015 when comparing to the same period last year. Net interest margin at 4.00% for the first six months of 2015, was 49 basis points higher than the 3.51% for the same six months of 2014. For the second quarter of 2015, net interest income at $3.1 million was 1.5% higher than the $3.0 million for first quarter 2015, yet the net interest margin declined to 3.92% for second quarter 2015 compared to the 4.06% for first quarter 2015. The driver behind the decreased net interest margin over the past quarter has been the result of the recent influx of deposits that has led to an increase on average of about $15.0 million in low-yielding (0.25%) excess cash on deposit at the Federal Reserve Bank which is considered an earning asset when computing net interest margin. Loan yields have remained consistent at just above 5.20% for both the first and second quarters of 2015 and the cost of interest-bearing liabilities have also been relatively consistent at about 0.85% for the first two quarters of 2015. 

Non-interest income has increased slightly quarter over quarter and at $324,000 for the first six months of 2015 was up 4.9% when compared to the $309,000 for the same period of 2014. Non-interest expenses at around $4.9 million were down 1.0% for the first six months of 2015 when compared to 2014; and when comparing non-interest expenses for the first two quarters of 2015, the downward trend continues.

Assets

Driven by a $15.0 million increase in loans for the first six months of 2015 and an increase in excess cash from an influx of deposits, total assets at $347.8 million as of June 30, 2015 increased $23.4 million, or 7.2%, compared to the $324.4 million as of December 31, 2014. "As the economy has strengthened, loan activity in our markets has picked up and the quality of requests has improved. During the downturn, loan demand was soft but our team remained engaged with existing clients and prospects and now that businesses are more optimistic about future opportunities and borrowing again, Premier Community Bank is being rewarded with strong loan demand from a variety of industries. And I don't see this trend changing anytime soon," stated Fred Johnson, the Bank's Chief Credit Officer. Most of the increase in loans has come from both owner-occupied and non-owner-occupied commercial real estate. Owner-occupied commercial real estate loans were $80.2 million, or 29.4% of total loans, as of June 30, 2015 while non-owner-occupied commercial real estate loans were $51.0 million, or 18.7% of total loans, compared to December 31, 2014 when owner-occupied commercial real estate loans were $73.1 million and non-owner-occupied commercial real estate loans were $46.2 million. Non-real estate commercial and industrial (C&I) loans at $76.7 million, or 28.1% of total loans, as of June 30, 2015 was consistent with the December 31, 2014 and June 30, 2014 amounts while construction loans at $30.8 million, or 11.3% of total loans, as of June 30, 2015 were also consistent with prior period amounts. 

The allowance for loan losses as of June 30, 2015 at $4.3 million, or 1.59% of total loans, was consistent with the December 31, 2014 amount but was below the $5.5 million, or 2.17% of total loans as of June 30, 2014 due to the 2014 fourth quarter partial loan charge-off of $1.1 million related to a borrower in bankruptcy. For the first six months of 2015, the Bank had $91,000 in loan charge-offs and $52,000 in recoveries, or $39,000 of net charge-offs. The Bank had no loan loss provision expense for the first six months of 2015 or for the full-year of 2014. 

As of June 30, 2015, the Bank had one loan in the amount of $1.1 million that was past due over 30 days and still accruing interest. Non-performing assets (consisting of loans on nonaccrual status and other real estate owned-OREO) continue their downward trend and as of June 30, 2015 were $8.3 million, or 2.4% of total assets, compared to $9.4 million as of December 31, 2014 when there were 2.9% of assets and June 30, 2014 when they totaled $11.2 million and were 3.3% of total assets. As of June 30, 2015 the Bank had $3.7 million in loans on nonaccrual status which consisted of two relationships (for which one borrower accounted for $3.2 million). OREO as of June 30, 2015 consisted of seven properties with carrying amounts ranging from $45,000 to $2.8 million and totaled $4.7 million in aggregate.

Deposits

Deposits totaled $277.4 million as of June 30, 2015 which was an increase of $30.8 million, or 12.5%, compared to the $246.7 million as of December 31, 2014 and was an increase of $40.6 million, or 17.2%, compared to the $236.8 million as of June 30, 2014. "We continue to experience significant increases in overall deposits which have been the result of our long-term core deposit initiatives and a new branch location. But also included in this overall growth are known temporary deposits from our existing client base. And as I stated before, the Bank remains cognizant of the short-term nature of some of this recent deposit growth and accordingly continues to retain considerable liquidity," stated Bob Ekblad, the Company's Chief Financial Officer. 

As of June 30, 2015, the Bank had $2.0 million in reciprocal brokered deposits while non-traditional out-of-area time deposits were $39.4 million compared to June 30, 2014 when the Bank had no brokered deposits and non-traditional out-of-area deposits were $37.2 million. 

Borrowings, Equity, and Capital

The Company continues to reduce various borrowings. Repurchase agreements which are more expensive and less advantageous to the Bank than traditional deposits were down to $5.4 million as of June 30, 2015 compared to $13.8 million at this time last year and $18.2 million at year-end 2014. During fourth quarter 2014, the Bank prepaid $25.0 million of Federal Home Loan Bank (FHLB) debt with a weighted average cost of 4.50%. With $5.6 million of new lower cost FHLB advances obtained during the first six months of 2015 (at a weighted average rate of 1.27%), total FHLB advances as of June 30, 2015 were $21.6 million compared to $16.0 million as of December 31, 2014; however FHLB debt was down $19.4 million, or 47.4%, when compared to the $41.0 million outstanding as of June 30, 2014. Other borrowings are now fully eliminated compared to June 30, 2014 when they were $2.4 million as during third quarter 2014 the Company converted $1.1 million of 8.50% subordinated notes into 259,441 of common shares and during the second quarter of 2015, the Company prepaid without penalty a $1.2 million holding company note at a rate of 7.3% which had a scheduled maturity of August 2016.

The Bank's capital ratios have fluctuated over the past several quarters. Continued earnings at the Bank and a change in the regulatory calculation of capital from the implementation of Basel III have positively impacted capital while payment from the Bank to its holding company of a one-time $1.2 million cash dividend during this most recent quarter (for the holding company to prepay the above mentioned $1.2 million note) and an increase in both average and risk-weighted assets have had an opposite impact. The Bank's leverage ratio and total risk-based capital ratios as of June 30, 2015 were 11.3% and 13.6%, respectively, compared to 10.9% and 14.2% as of December 31, 2014 and 11.1% and 14.5% as of June 30, 2014. These capital ratios for the Bank continue to be well above 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.

 
Premier Commercial Bancorp
Consolidated Balance Sheets
Unaudited
(amounts in 000s, except per share data and ratios)
 
                               
          % Change   % Change  
    June 30,     2015 vs. December 31, Year-to-  
    2015     2014     2014     2014     Date  
                               
ASSETS                              
  Cash & due from banks   $ 40,453     $ 25,348     59.6 %   $ 21,751     86.0 %
  Investment securities - available for sale     15,880       39,376     -59.7 %     23,948     -33.7 %
  Investments - other     3,251       4,085     -20.4 %     4,025     -19.2 %
                                       
  Gross loans     272,597       251,453     8.4 %     257,624     5.8 %
  Allowance for loan losses     (4,323 )     (5,452 )   -20.7 %     (4,362 )   -0.9 %
    Net loans     268,274       246,001     9.1 %     253,262     5.9 %
                                       
  Other real estate owned     4,658       5,568     -16.3 %     5,411     -13.9 %
  Other assets     15,270       15,338     -0.4 %     15,953     -4.3 %
                                       
    Total Assets   $ 347,786     $ 335,716     3.6 %   $ 324,350     7.2 %
                                     
LIABILITIES                                    
  Deposits   $ 277,471     $ 236,771     17.2 %   $ 246,708     12.5 %
  Repurchase agreements     5,426       13,830     -60.8 %     18,188     -70.2 %
  FHLB borrowings     21,550       41,000     -47.4 %     16,000     34.7 %
  Other borrowings     -       2,405     -100.0 %     1,247     -100.0 %
  Junior subordinated debentures     8,248       8,248     0.0 %     8,248     0.0 %
  Other liabilities     3,609       3,841     -6.0 %     3,588     0.6 %
    Total Liabilities     316,304       306,095     3.3 %     293,979     7.6 %
                                     
STOCKHOLDERS' EQUITY     31,482       29,621     6.3 %     30,371     3.7 %
                                         
    Total Liabilities and Stockholders' Equity   $ 347,786     $ 335,716     3.6 %   $ 324,350     7.2 %
                                     
Shares outstanding at end-of-period     5,795,415       5,535,974             5,795,415        
Book value per share   $ 5.43     $ 5.35           $ 5.24        
Allowance for loan losses to total loans     1.59 %     2.17 %           1.69 %      
Non-performing assets (non-accrual loans & OREO)   $ 8,320     $ 11,171           $ 9,351        
                                     
Bank Tier 1 leverage ratio     11.33 %     11.12 %           10.88 %      
Bank Tier 1 risk-based capital ratio     12.31 %     13.24 %           12.94 %      
Bank Total risk-based capital ratio     13.57 %     14.50 %           14.19 %      
                                     
 
 
Consolidated Statements of Net Income
Unaudited
(amounts in 000s, except per share data and ratios)
    
                                     
    Three Months Ended           Six Months Ended        
    6/30/2015     3/31/2015     % Change     6/30/2015     6/30/2014     % Change  
INTEREST INCOME                                            
  Loans   $ 3,483     $ 3,375     3.2 %   $ 6,858     $ 6,548     4.7 %
  Investments - available for sale     88       115     -23.5 %     203       391     -48.1 %
  Federal funds sold and other     39       31     25.8 %     70       35     100.0 %
    Total interest income     3,610       3,521     2.5 %     7,131       6,974     2.3 %
                                             
INTEREST EXPENSE                                            
  Deposits     290       266     9.0 %     556       568     -2.1 %
  Repurchase agreements and federal funds purchased     3       6     -50.0 %     9       16     -43.8 %
  FHLB borrowings     146       131     11.5 %     277       820     -66.2 %
  Other borrowings     28       23     21.7 %     51       97     -47.4 %
  Junior subordinated debentures     56       54     3.7 %     110       117     -6.0 %
    Total interest expense     523       480     9.0 %     1,003       1,618     -38.0 %
                                             
NET INTEREST INCOME BEFORE LOAN LOSS PROVISION     3,087       3,041     1.5 %     6,128       5,356     14.4 %
                                             
PROVISION FOR LOAN LOSSES     -       -     0.0 %     -       -     0.0 %
                                             
NET INTEREST INCOME AFTER LOAN LOSS PROVISION     3,087       3,041     1.5 %     6,128       5,356     14.4 %
                                             
NON-INTEREST INCOME     167       157     6.4 %     324       309     4.9 %
                                             
NON-INTEREST EXPENSE     2,417       2,446     -1.2 %     4,863       4,913     -1.0 %
                                             
INVESTMENTS- REALIZED GAINS / (LOSSES)     3       -     0.0 %     3       -     0.0 %
OREO VALUATION ADJUSTMENTS & GAINS/(LOSSES) ON SALES - NET     91       55     65.5 %     146       (17 )   -958.8 %
                                             
INCOME BEFORE PROVISION FOR INCOME TAXES     931       807     15.4 %     1,738       735     136.5 %
                                             
PROVISION FOR INCOME TAXES     324       278     16.5 %     602       227     165.2 %
                                             
NET INCOME   $ 607     $ 529     14.7 %   $ 1,136     $ 508     123.6 %
                                             
Earnings per share - Basic   $ 0.10     $ 0.09           $ 0.19     $ 0.09        
                                             
Earnings per share - Diluted   $ 0.10     $ 0.09           $ 0.19     $ 0.09        
                                             
Return on average equity     7.74 %     6.97 %           7.36 %     3.50 %      
Return on average assets     0.71 %     0.65 %           0.68 %     0.31 %      
Net interest margin     3.92 %     4.06 %           4.00 %     3.51 %      
Efficiency ratio     74.3 %     76.5 %           75.4 %     86.7 %      
                                             

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