SOURCE: Premier Commercial Bancorp

Premier Commercial Bancorp

October 28, 2015 16:15 ET

Premier Commercial Bancorp Reports Third Quarter 2015 Results

HILLSBORO, OR--(Marketwired - Oct 28, 2015) - Premier Commercial Bancorp (OTCBB: PRCB), a single bank holding company for Premier Community Bank based in Hillsboro, Oregon, today reported net income of $1.9 million, or $0.32 per diluted share, for the nine months ended September 30, 2015 compared to net income of $905,000, or $0.16 per diluted share, for the same nine month period in 2014. Net income for third quarter 2015 was $738,000, or $0.13 per diluted share compared to $607,000 or $0.10 per diluted share for second quarter and $529,000, or $0.09 per diluted share, for first quarter 2015.

Highlights for the quarter and year-to-date included:

  • Loans increased $21.1 million for the first nine months of 2015 and increased $27.1 million since this time last year and as of September 30, 2015 were $278.7 million.
  • Deposit growth over the past twelve months was $29.4 million and has supported loan growth and a reduction in borrowings, which has driven significant increases in net interest income and profitability.
  • Net interest income for the first nine months of 2015 at $9.4 million was up almost $1.2 million, or 14.5% compared to the $8.2 million for the same period in 2014.
  • Net income for the first nine months of 2015 at $1.9 million was $969,000, or 107.1%, above the $905,000 for the same nine month period of 2014.
  • Quarterly net incomes continue to rise and were $738,000, $607,000, $529,000 for the third, second, and first quarters of 2015, respectively.
  • Net interest margin for the first nine months of 2015 increased to 3.96% compared to 3.53% for the first nine months of 2014.
  • Efficiency ratio was 68.3% for third quarter 2015 and was 72.9% year-to-date 2015.
  • ROE and ROA for third quarter 2015 were 9.13% and 0.84%, and for the full nine months year-to-date were 7.97% and 0.74%.

Regarding the Company's recent performance, Rick A. Roby, its President and CEO, stated, "Our franchise footprint of offices located in the economic engine of the Portland MSA allows us to continue to grow and drive additional profits for the Company. We are especially pleased with our expansion into the Newberg, Oregon market which is producing strong results after only nine months. The community bank business model has resonated, as is evident in our financial results this quarter and year-to-date. The local economic trends are positive and we look forward to continued successes as we move ahead."

Earnings

Comparing nine month year-over-year results, growth in higher yielding loans and their related earnings more than offset the reduction in investments over the period and their decreased earnings. Overall interest income from earning assets was $10.9 million for the nine months ending September 30, 2015 and was $252,000, or 2.4% higher than the $10.6 million for the same nine month period in 2014. With the fourth quarter 2014 reduction of $25.0 million in high cost Federal Home Loan Bank debt (weighted average cost of 4.50%) along with reductions in repurchase agreements and other borrowings, total interest expense at $1.5 million was down $932,000, or 14.5%, for the first nine months of 2015 when compared to the $2.4 million for the same period in 2014. With increased interest income on earning assets and reduced interest expenses from borrowings, net interest income at $9.4 million year-to-date 2015 was almost $1.2 million, or 14.5%, higher than the $8.2 million for the comparable period during 2014. These improvements in asset mix and reduction in borrowings drove net interest margin for the first nine months of 2015 to 3.96% compared to 3.53% for the same period in 2014.

Non-interest income had modest increases quarter-over-quarter and year-over-year while non-interest expenses were down $96,000, or 4.0%, for third quarter 2015 compared to second quarter 2015 and for the first nine months of 2015 were down $49,000, or 0.7%.

Assets

Loans increased $27.1 million, or 10.8%, over the past year while over the same period available-for-sale securities decreased by $18.7 million. Total assets were $349.6 million as of September 30, 2015, an increase of $5.9 million, or 1.7%, compared to the $343.6 million as of September 30, 2014. Relative to year-end 2014, total assets at this quarter-end were up $25.2 million, or 7.8%, as a result of increased loans along with increased deposits which have led to increased cash. "Loan originations are strong and are more than offsetting normal and unscheduled loan pay downs, so overall loan growth is doing well as net loan growth was over $6.0 million again this past quarter," stated Fred Johnson, the Bank's Chief Credit Officer. Loans were $278.7 million as of September 30, 2015 compared to $257.6 million and $251.6 million as of December 31, 2014 and September 30, 2014, respectively. The year-over-year increase in loans came from all categories. As of September 30, 2015 non-real estate commercial and industrial (C&I) loans were $79.4 million, or 28.7% of total loans and were up $4.5 million, or 6.0%, compared to the $74.9 million outstanding as of September 30, 2014. Construction loans at $35.8 million as of September 30, 2015 were 12.8% of total loans while owner-occupied commercial real estate loans were $81.1 million, or 29.1%, and non-owner-occupied commercial real estate loans were $49.2 million, or 17.6%, of total loans. And Mr. Johnson concludes, "The Bank is pleased with the recent broad-based loan growth and the loan team remains very enthusiastic about the continued opportunities lying ahead."

As of September 30, 2015, the allowance for loan losses was $4.3 million (or 1.55% of total loans) which was consistent with the December 31, 2014 amount but below the $5.5 million (or 2.17% of total loans) as of September 30, 2014 which was due to the 2014 fourth quarter partial loan charge-off of $1.1 million related to a borrower in bankruptcy. For the first nine months of 2015, the Bank had $91,000 in loan charge-offs and $63,000 in recoveries, or $28,000 of net charge-offs. The Bank had no loan loss provision expense for the first nine months of 2015 or for the full-year of 2014.

As of September 30, 2015, the Bank had two loans totaling $1.1 million that were past due over 30 days and still accruing interest while non-performing assets (consisting of loans on nonaccrual status and other real estate owned-OREO) were $8.1 million, or 2.3% of total assets, and continued their downward trend from the $9.4 million as of December 31, 2014 and $11.0 million as of September 30, 2014. At September 30, 2015 the Bank had two loan relationships in non-accrual status which totaled $3.6 million (for which one borrower accounted for $3.1 million). OREO as of September 30, 2015, consisted of seven properties with carrying amounts ranging from $45,000 to $2.8 million, and in aggregate totaled $4.5 million.

Deposits

Deposits were up $29.4 million, or 11.8%, over the past year to $277.8 million as of September 30, 2015 compared to $248.4 million as of September 30, 2014. "Despite some temporary deposits, we continue to be very pleased with the Bank's deposit growth which has been driven by a continued focus on core relationships within our traditional markets as well as successes within the Newberg market brought about by the opening of our new branch in January of this year," stated Bob Ekblad, the Company's Chief Financial Officer. And he continued, "This growth over the past several years has primarily been in transaction accounts so our deposit mix has significantly strengthened as well." As of September 30, 2015, the Bank's demand deposits and NOW accounts totaled $92.5 million, or 33.3% of total deposits, while money market and savings accounts were $102.5 million and time deposits were $82.8 million, or 36.9% and 29.8%, respectively.

As of September 30, 2015, the Bank had $2.2 million in reciprocal brokered deposits while non-traditional out-of-area time deposits were $34.6 million compared to September 30, 2014 when the Bank had no brokered deposits and non-traditional out-of-area deposits were $33.5 million.

Borrowings, Equity, and Capital

The increases in the Bank's deposits have not only funded loan growth, but have also allowed the Company to reduce borrowings. Over the past twelve months, repurchase agreements were down $3.5 million, or 37.9%, to $5.7 million and Federal Home Loan Bank borrowings were down $19.5 million, or 47.4%, to $21.6 million as of September 30, 2015. Federal Home Loan Bank borrowings consist of eight different notes with maturities ranging from December 2017 through April 2020 with rates from 1.08% to 3.57% and a weighted average cost of 2.68%. 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 varied over the past several quarters. Despite the second quarter 2015 one-time $1.2 million cash dividend paid by the Bank to the holding company (to prepay the above mentioned $1.2 million note that was at 7.3%) which reduced Bank capital, the Bank's net income of $2.0 million for the first nine months of 2015 and the implementation of Basel III in first quarter 2015 which reduced the amount of the Bank's disallowed deferred tax asset from its regulatory capital calculation, the Bank's amount of capital has increased. The Bank's leverage ratio was 11.30% as of September 30, 2015 compared to 10.88% and 11.06% as of December 31, 2014 and September 30, 2014, respectively. With growing loans and other changes brought about by the implementation of Basel III, risk-weighted assets have grown and caused reductions to the Bank's total risk-based capital ratio which was 13.40% as of September 30, 2015 compared to 14.19% and 14.55% for December 31, 2014 and September 30, 2014, 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)
 
                               
    September 30,     % Change     December 31,     % Change  
    2015     2014     2015 vs. 2014     2014     Year-to-Date  
                                     
ASSETS                                    
  Cash & due from banks   $ 33,184     $ 34,234     -3.1 %   $ 21,751     52.6 %
  Investment securities - available for sale     19,104       37,784     -49.4 %     23,948     -20.2 %
  Investments - other     3,242       4,055     -20.0 %     4,025     -19.5 %
                                       
  Gross loans     278,730       251,647     10.8 %     257,624     8.2 %
  Allowance for loan losses     (4,334 )     (5,452 )   -20.5 %     (4,362 )   -0.6 %
    Net loans     274,396       246,195     11.5 %     253,262     8.3 %
                                       
  Other real estate owned     4,523       5,899     -23.3 %     5,411     -16.4 %
  Other assets     15,112       15,467     -2.3 %     15,953     -5.3 %
                                       
    Total Assets   $ 349,561     $ 343,634     1.7 %   $ 324,350     7.8 %
                                     
LIABILITIES                                    
  Deposits   $ 277,830     $ 248,443     11.8 %   $ 246,708     12.6 %
  Repurchase agreements     5,735       9,240     -37.9 %     18,188     -68.5 %
  FHLB borrowings     21,550       41,000     -47.4 %     16,000     34.7 %
  Other borrowings     -       1,279     -100.0 %     1,247     -100.0 %
  Junior subordinated debentures     8,248       8,248     0.0 %     8,248     0.0 %
  Other liabilities     3,936       4,108     -4.2 %     3,588     9.7 %
    Total Liabilities     317,299       312,318     1.6 %     293,979     7.9 %
                                     
STOCKHOLDERS' EQUITY     32,262       31,316     3.0 %     30,371     6.2 %
                                     
    Total Liabilities and Stockholders' Equity   $ 349,561     $ 343,634     1.7 %   $ 324,350     7.8 %
                                     
Shares outstanding at end-of-period     5,795,415       5,795,415             5,795,415        
Book value per share   $ 5.57     $ 5.40           $ 5.24        
Allowance for loan losses to total loans     1.55 %     2.17 %           1.69 %      
Non-performing assets (non-accrual loans & OREO)   $ 8,096     $ 11,035         $ 9,351        
                                     
Bank Tier 1 leverage ratio     11.30 %     11.06 %           10.88 %      
Bank Tier 1 risk-based capital ratio     12.14 %     13.30 %           12.94 %      
Bank Total risk-based capital ratio     13.40 %     14.55 %           14.19 %      
                                     
                                     
                                     
Consolidated Statements of Net Income  
Unaudited  
(amounts in 000s, except per share data and ratios)  
                               
    Three Months Ended         Nine Months Ended        
    9/30/2015   6/30/2015   % Change     9/30/2015   9/30/2014     % Change  
INTEREST INCOME                                      
  Loans   $ 3,596   $ 3,483   3.2 %   $ 10,454   $ 9,968     4.9 %
  Investments - available for sale     97     88   10.2 %     300     572     -47.6 %
  Federal funds sold and other investments     37     39   -5.1 %     107     69     55.1 %
    Total interest income     3,730     3,610   3.3 %     10,861     10,609     2.4 %
                                       
INTEREST EXPENSE                                      
  Deposits     295     290   1.7 %     851     835     1.9 %
  Repurchase agreements and federal funds purchased     3     3   0.0 %     12     24     -50.0 %
  FHLB borrowings     147     146   0.7 %     424     1,238     -65.8 %
  Other borrowings     -     28   -100.0 %     51     167     -69.5 %
  Junior subordinated debentures     55     56   -1.8 %     165     171     -3.5 %
    Total interest expense     500     523   -4.4 %     1,503     2,435     -38.3 %
                                       
NET INTEREST INCOME BEFORE LOAN LOSS PROVISION     3,230     3,087   4.6 %     9,358     8,174     14.5 %
                                       
PROVISION FOR LOAN LOSSES     -     -   0.0 %     -     -     0.0 %
                                       
NET INTEREST INCOME AFTER LOAN LOSS PROVISION     3,230     3,087   4.6 %     9,358     8,174     14.5 %
                                       
NON-INTEREST INCOME     169     167   1.2 %     493     474     4.0 %
                                       
NON-INTEREST EXPENSE     2,321     2,417   -4.0 %     7,184     7,233     -0.7 %
                                       
INVESTMENTS- REALIZED GAINS / (LOSSES)     -     3   -100.0 %     3     -     n/a  
OREO VALUATION ADJS & GAINS/(LOSSES) ON SALES - NET     65     91   -28.6 %     211     (80 )   -363.8 %
                                       
INCOME BEFORE PROVISION FOR INCOME TAXES     1,143     931   22.8 %     2,881     1,335     115.8 %
                                       
PROVISION FOR INCOME TAXES     405     324   25.0 %     1,007     430     134.2 %
                                       
NET INCOME   $ 738   $ 607   21.6 %   $ 1,874   $ 905     107.1 %
                                       
Earnings per share - Basic   $ 0.13   $ 0.10         $ 0.32   $ 0.16        
                                       
Earnings per share - Diluted   $ 0.13   $ 0.10         $ 0.32   $ 0.16        
                                       
Return on average equity     9.13 %   7.74 %         7.97 %   4.07 %      
Return on average assets     0.84 %   0.71 %         0.74 %   0.36 %      
Net interest margin     3.93 %   3.92 %         3.96 %   3.53 %      
Efficiency ratio     68.3 %   74.3 %         72.9 %   83.6 %      
                                       

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