SOURCE: Premier Commercial Bancorp

Premier Commercial Bancorp

October 28, 2014 16:10 ET

Premier Commercial Bancorp Reports Third Quarter 2014 Results

HILLSBORO, OR--(Marketwired - Oct 28, 2014) - Premier Commercial Bancorp (OTCBB: PRCB), a single bank holding company for Premier Community Bank based in Hillsboro, Oregon (the Bank), today reported a net profit of $905,000 for the nine months ended September 30, 2014 compared to $1.1 million for the same nine months of 2013. Interest income on earning assets less interest expenses on deposits and borrowings, or net interest income, was up $398,000 for the first nine months of 2014 compared to 2013; however increased expenses related to problem assets and net losses and valuation adjustments on OREO properties have negatively impacted earnings for 2014 compared to 2013. Earnings per diluted share for the nine months ended September 30, 2014 was $0.16 compared to $0.28 per diluted share for the same nine 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 and additional shares issued this past quarter upon the conversion of $1.1 million of debt into common stock. Net income for third quarter 2014 of $397,000, or $0.07 per diluted share, was up from the $250,000, or $0.04 per diluted share, for the second quarter; and $258,000, or $0.05 per diluted share, for the first quarter of 2014. 

The Company's President and CEO, Rick A. Roby stated, "Core deposit growth continues to be very strong resulting from our excellent customer service as well as best in class products and services creating significant liquidity for continued loan growth. Premier Community Bank lenders continue to make credit available to our local business clients for operations and expansion in our local markets. We are very excited about the Bank's scheduled opening at the first of the year of a new branch in the neighboring town of Newberg. The new office will link with our Durham office to expand our presence in the southern area of this natural business market. Our staff is well-established in the area and the community has been anticipating the opening of a locally owned and operated bank. Many growth opportunities exist at this new location and we anticipate positive contributions to the Bank. On a different note, we continue to work through the collection of problem assets, and while the process is costly, non-performing assets are down almost $8.0 million, or 41.6% over the past year, and progress continues." 

Earnings

Interest expense at $2.4 million for the first nine months of 2014 was down $315,000, or 11.5%, when compared to the first nine months of 2013 as the Bank improved its deposit mix and obtained favorable repricings on maturing time deposits. Interest income on earning assets at $10.6 million for the first nine months of 2014 was up $83,000, or 0.8% from the same period of 2013 as lower loan repricings as well as the effects of competition on new loan rates offset most of the increase from loan growth. Net interest income for the first nine months of 2014 at $8.2 million was $398,000, or 5.1% higher than the $7.8 million for the same period in 2013. Net interest margin for the 9 months ended September 30, 2014 also increased and was 3.53% relative to 3.42% for the same period in 2013. 

Noninterest income at $474,000 year-to-date 2014 was consistent with the $464,000 for the same nine months of 2013. Noninterest expense at $7.2 million year-to-date 2014 was up $457,000, or 6.7%, compared to the $6.8 million for 2013. Increased personnel costs (for both the existing employee base as well as strategic new hires, including many of those for the new Newberg Branch) have driven most of the increase in non-interest expenses, however costs related to problem loans and OREO which were $420,000 for the first nine months of 2014 and $317,000 for the first nine months of 2013, continue to adversely affect non-interest expenses. 

Valuation adjustments on OREO and gains/losses on the sale of OREO properties adversely affected net income for 2014 relative to 2013 as for the first nine months of 2014 combined they were an $80,000 loss, while in 2013 they netted to a $220,000 gain for the period.

Assets

Total Assets at September 30, 2014 of $343.6 million were up $8.5 million, or 2.5% compared to the $335.1 million as of December 31, 2013, and were up $4.4 million, or 1.3% compared to September 30, 2013. Outstanding loans of $251.6 million as of September 30, 2014 have steadily increased when compared to the $248.4 million as of December 31, 2013 and the $244.8 million a year ago. Loan mix over the past year remained relatively consistent. Non-real estate commercial and industrial (C&I) loans are $75.0 million, or 29.8% of the loan portfolio as of September 30, 2014, owner occupied commercial real estate loans are $71.8 million and non-owner occupied commercial real estate loans are $44.9 million, or 28.5% and 17.8% respectively, while real estate acquisition, development, and construction loans were $30.4 million, or 12.0% of the total loan portfolio. 

As of September 30, 2014, the Bank had one loan totaling $671,000 that was past due over 30 days and still accruing interest while as of September 30, 2013 and December 31, 2013, the Bank had no loans past due and still accruing interest. 

The allowance for loan losses at $5.4 million or 2.17% of loans was consistent with the December 31, 2013 amounts and was down from the $6.1 million, or 2.49% of loans as of September 30, 2013 due to a $750,000 reverse loan provision taken during fourth quarter last year. The Bank had no loan loss provision expense for the first nine months of 2014 or 2013. 

For the first nine months of 2014, the Bank had $103,000 in loan charge-offs relative to $133,000 in recoveries, or $30,000 in net recoveries. For the full-year of 2013, the Bank had $290,000 in loan charge-offs relative to $309,000 in recoveries, or net recoveries of $19,000. 

Non-performing assets consist of loans on nonaccrual status and other real estate owned (OREO) which totaled $11.0 million, or 3.21% of total assets as of September 30, 2014 compared to $15.1 million, or 4.51% of total assets, as of December 31, 2013 and $18.9 million, or 5.57% of assets, as of September 30, 2013. As of September 30, 2014 the Bank had $5.1 million in loans on nonaccrual status which consisted of four relationships (one borrower accounted for $4.6 million) and OREO was $5.9 million which consisted of 10 projects/properties with carrying amounts ranging from $45,000 to $2.9 million.

Deposits and Repurchase Agreements

Deposits increased to $248.4 million as of September 30, 2014 relative to the $236.2 million as of September 30, 2013, which was a $12.2 million, or 5.2% increase. As of September 30, 2014 the Bank had no brokered deposits and $33.5 million of non-traditional out-of-area time deposits compared to September 30, 2013 when the Bank had $2.3 million of brokered deposits and $41.3 million of non-traditional out-of-area deposits. Deposit growth from local markets exceeded $22.3 million over the past twelve months. 

The Bank continues to reduce the amount of its outstanding client repurchase agreements as they are more expensive and less beneficial to the Bank than traditional deposits. At $9.2 million as of September 30, 2014, repurchase agreements were down $8.1 million, or 46.7%, from the $17.3 million as of September 30, 2013.

Borrowings, Equity and Capital

Included within "Other Borrowings" as of September 30 and December 31, 2013, the Company had $1,095,000 of 8.50% convertible notes that were scheduled to mature in December 2014. However, during this past quarter, the Company converted all those notes, plus interest that would have been earned through maturity, to common stock at $4.40 per share, or 259,441 shares in total. 

Through retained earnings, increases in other comprehensive earnings, and the conversion of notes to common stock, the Company's equity at $31.3 million as of September 30, 2014 increased $2.7 million, or 9.5%, when compared to the $28.6 million a year ago. At the Bank level, regulatory capital ratios continue to increase. The Bank's leverage ratios and total risk-based capital ratios as of September 30, 2014 were 11.06% and 14.55%, respectively, compared to 10.65% and 14.23% as of December 31, 2013 and 10.95% and 14.37% as of September 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 PRCB. 

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)
 
                               
    September 30,     % Change     December 31,     % Change  
    2014     2013     2014 vs. 2013     2013     Year-to-Date  
                                     
ASSETS                                    
  Cash & due from banks   $ 34,234     $ 33,387     2.5 %   $ 27,602     24.0 %
  Federal funds sold     -       -     0.0 %     -     0.0 %
  Investment Securities - Available for Sale     37,784       40,726     -7.2 %     39,471     -4.3 %
  Investments - Other     4,055       2,168     87.0 %     2,149     88.7 %
                                     
  Gross loans     251,647       244,841     2.8 %     248,434     1.3 %
  Allowance for loan losses     (5,452 )     (6,092 )   -10.5 %     (5,422 )   0.6 %
    Net loans     246,195       238,749     3.1 %     243,012     1.3 %
                                     
  Other real estate owned     5,899       8,993     -34.4 %     7,598     -22.4 %
  Other assets     15,467       15,175     1.9 %     15,294     1.1 %
                                     
Total Assets   $ 343,634     $ 339,198     1.3 %   $ 335,126     2.5 %
                                     
LIABILITIES                                    
  Deposits   $ 248,443     $ 236,161     5.2 %   $ 234,082     6.1 %
  Federal funds purchased     -       -     0.0 %     -     0.0 %
  Repurchase agreements     9,240       17,334     -46.7 %     16,530     -44.1 %
  FHLB borrowings     41,000       41,000     0.0 %     41,000     0.0 %
  Other borrowings     1,279       2,494     -48.7 %     2,465     -48.1 %
  Junior subordinated debentures     8,248       8,248     0.0 %     8,248     0.0 %
  Other liabilities     4,108       5,366     -23.4 %     4,355     -5.7 %
    Total Liabilities     312,318       310,603     0.6 %     306,680     1.8 %
                                     
STOCKHOLDERS' EQUITY     31,316       28,595     9.5 %     28,446     10.1 %
    Total Liabilities and Stockholders' Equity   $ 343,634     $ 339,198     1.3 %   $ 335,126     2.5 %
                                     
Shares outstanding at end-of-period     5,795,415       5,535,974             5,535,974        
Book value per share   $ 5.40     $ 5.17           $ 5.14        
Allowance for loan losses to total loans     2.17 %     2.49 %           2.18 %      
Non-performing assets (non-accrual loans & OREO)   $ 11,035     $ 18,888           $ 15,136        
                                     
Bank Tier 1 leverage ratio     11.06 %     10.95 %           10.65 %      
Bank Tier 1 risk-based capital ratio     13.30 %     13.10 %           12.97 %      
Bank Total risk-based capital ratio     14.55 %     14.37 %           14.23 %      
                                     
                                     
Consolidated Statement of Operations
Unaudited
(amounts in 000s, except per share data and ratios)
       
                                     
    Three Months Ended           Nine Months Ended        
    9/30/2014     6/30/2014     % Change     9/30/2014     9/30/2013     % Change  
INTEREST INCOME                                            
  Loans   $ 3,420     $ 3,222     6.1 %   $ 9,968     $ 10,075     -1.1 %
  Investments     181       196     -7.7 %     572       406     40.9 %
  Federal funds sold and other     34       19     78.9 %     69       45     53.3 %
    Total interest income     3,635       3,437     5.8 %     10,609       10,526     0.8 %
                                             
INTEREST EXPENSE                                            
  Deposits     267       283     -5.7 %     835       1,117     -25.2 %
  Repurchase agreements and federal funds purchased     8       7     14.3 %     24       55     -56.4 %
  FHLB borrowings     418       412     1.5 %     1,238       1,237     0.1 %
  Other borrowings     70       49     42.9 %     167       150     11.3 %
  Junior subordinated debentures     54       55     -1.8 %     171       191     -10.5 %
    Total interest expense     817       806     1.4 %     2,435       2,750     -11.5 %
                                             
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES     2,818       2,631     7.1 %     8,174       7,776     5.1 %
                                             
PROVISION FOR LOAN LOSSES     -       -     0.0 %     -       -     0.0 %
                                             
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES     2,818       2,631     7.1 %     8,174       7,776     5.1 %
                                             
NON-INTEREST INCOME     165       156     5.8 %     474       464     2.2 %
                                             
NON-INTEREST EXPENSE     2,320       2,473     -6.2 %     7,233       6,776     6.7 %
                                             
OREO VALUATION ADJ. & GAINS/(LOSSES) ON SALES - NET     (63 )     47     -234.0 %     (80 )     220     -136.4 %
                                             
INCOME BEFORE PROVISION FOR INCOME TAXES     600       361     66.2 %     1,335       1,684     -20.7 %
                                             
PROVISION FOR INCOME TAXES     203       111     82.9 %     430       547     -21.4 %
                                             
NET INCOME   $ 397     $ 250     58.8 %   $ 905     $ 1,137     -20.4 %
                                             
Earnings per share - Basic   $ 0.07     $ 0.04           $ 0.16     $ 0.28        
                                             
Earnings per share - Diluted   $ 0.07     $ 0.04           $ 0.16     $ 0.28        
                                             
Return on average equity     5.13 %     3.39 %           4.07 %     6.80 %      
Return on average assets     0.46 %     0.30 %           0.36 %     0.46 %      
Net interest margin     3.60 %     3.43 %           3.53 %     3.42 %      
Efficiency ratio     77.8 %     88.7 %           83.6 %     82.2 %      
                                             

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