Pacific Commerce Bank Reports Second Quarter 2013 Financial Results and Release of Consent Orders

Marketwired

LOS ANGELES, CA--(Marketwired - Jul 29, 2013) - Pacific Commerce Bank (OTCQB: PFCI) today reported financial results for the second quarter and the six months ended June 30, 2013 that reflected solid earnings growth attributed to increases in interest and non-interest income and continuing asset quality improvement.

Net income for the second quarter of 2013 was $567,000 or $0.13 per share, which compares to a net income of $164,000 or $0.04 per share for the same quarter last year. 2013 second quarter net income reflected gains on sales of securities and OREO of approximately $396,000 and $28,000, respectively. 2012 second quarter net income reflected gain on sales of OREO of approximately $278,000. Excluding gains on sale of assets, core operating income in second quarter of 2013 increased by $257,000 compared to the same quarter a year ago.

For the six months ended June 30, 2013, net income was $802,000 or $0.18 per share, which compares to net income of $483,000 or $0.11 per share for the same period in 2012. For the first half of 2013, the Bank recognized gains on sales of securities and OREO of approximately $635,000 and $28,000, respectively. Net income for the six months ended June 30, 2012 included gain on sale of OREO and miscellaneous non‐recurring income of approximately $207,000 and $339,000, respectively. Year-to-date core operating income increased by $202,000, year-over-year.

Asset quality continued to improve in the second quarter of 2013 with significant reductions in non-performing loans to less than 1.00% of total loans. Non-performing assets reduced to 2.21% of total assets versus 8.40% a year ago. Non-accrual loans were $1.2 million at quarter-end, with a further reduction of nearly $700,000 in the first week of July. One of three OREO properties was sold at a gain of $28,000 in the second quarter, with another OREO property currently in escrow.

Second quarter results showed continued core earnings improvement led by loan portfolio growth and a ramping up of the Bank's SBA lending program. New loan originations of over $36 million for the first six months of the year resulted in a 13% growth in loans outstanding year-to-date. Strong core deposit growth contributed to a further reduction of the Bank's overall cost of funds. Taking advantage of favorable market conditions, securities sales resulted in gains of $635,000 in the first half of the year, creating liquidity that will be used to fund a continuing robust loan pipeline.

CEO Scott R. Andrews commented, "Second quarter core earnings increased seven-fold over first quarter results and is further evidence of the overall financial improvement of Pacific Commerce Bank." On July 8th, the California Department of Business Oversight, formerly known as the Department of Financial Institutions released the Bank from the Consent Orders that had been in place since September 2011, which is further evidence of the strength and stability of the Bank. Andrews further commented, "Release of the Consent Orders is an indication of the hard work the Board and management team have put in over the past year, and we look forward to executing the Bank's long‐ term strategy of expanding our presence throughout Southern California."

"The Board of Directors of Pacific Commerce Bank is very pleased with the improved results for the second quarter and the first half of the year. The measured growth in the loan portfolio combined with

the significant improvement in overall asset quality are key elements to the improved financial performance of the institution," commented Chairman Thomas Iino.

Pacific Commerce Bank is exceptionally well capitalized and poised for future growth opportunities. The Bank's regulatory capital ratios as of June 30, 2013 are as follows:

   
Tier 1 Leverage Ratio: 13.77%
Tier 1 Risk‐Based Capital Ratio: 17.34%
Total Risk‐Based Capital Ratio: 18.62%
   

Selected financial highlights as of June 30, 2013:

  • Total assets were $163.0 million compared to $166.0 million a year ago and $155.9 million at year-end 2012

  • Total loans were $131.2 million compared to $110.5 million a year ago and $116.3 million at year-end 2012

  • Total deposits were $139.8 million compared to $144.0 million a year ago and $133.1 million at year-end 2012

  • Non‐accrual loans were $1.2 million compared to $9.4 million a year ago, a reduction of $8.2 million or 77%. An additional reduction of nearly $700 thousand in non-accrual loans occurred in the first week of July.

  • Allowance for Loan Losses to Total Loans was 3.65% versus 4.51%, a year ago

  • Net interest margin for the second quarter was 4.12%, an improvement of 30 basis points compared to the same quarter a year ago

  • Year-to-date net interest margin was 4.13%, an improvement of 27 basis points compared to the same period a year ago

  • QTD average cost of funds was 0.34% in the second quarter 2013, versus 0.43% for the same quarter 2012

  • YTD average cost of funds was 0.35% for the first half of 2013, versus 0.43% for the same period 2012

  • Total Tangible Equity to Total Tangible Assets was 13.34% versus 12.48% a year ago

About Pacific Commerce Bank
Established in 2002, Pacific Commerce Bank is a business-oriented community bank with offices in downtown Los Angeles and West Los Angeles. Founded by local business owners and professionals, the Bank is focused on meeting the diverse financial needs of its clients, and offers a full range of loan, deposit and treasury management products. Information about the Bank can be obtained on its website: www.pacificcommercebank.com

Forward Looking Information
The financial information in this press release is based on unaudited financial results. Certain statements in this press release are "forward-looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements are subject to risks and uncertainties and therefore the bank's actual results may differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that the bank is subject to include, but are not limited to, risks related to the local and national economy, including fluctuations in interest rates and costs and changes in economic policy; the ability of the bank to perform in accordance with its plans; competition; regulatory matters; and other risks detailed in its filings with the State of California Department of Financial Institutions and the Federal Deposit Insurance Corporation. The bank cautions readers not to place undue reliance on any forward-looking statements. The bank does not undertake, and specifically disclaims any obligation, to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

 
 
Pacific Commerce Bank
Selected Financial Data - Unaudited ('000)
 
BALANCE SHEET   6/30/2013   6/30/2012
Total Assets   $163,020   $166,038
Total Investments   $2,443   $26,951
Gross Loans   $131,203   $110,566
Allowance for Loan Losses   ($4,788)   ($4,981)
Other Real Estate Owned   $2,295   $4,721
Total Deposits   $139,849   $144,043
Total Borrowings   $0   $0
Total Stockholders' Equity   $22,017   $21,001
Net Charge‐offs/(Recoveries)   ($84)   $995
Total Non‐Accrual Loans   $1,247   $9,402
ALLL / Total Loans   3.65%   4.51%
ALLL / Non‐Accrual Loans   384%   53%
Common Shares Outstanding   4,461,255   4,461,255
 
 
 
 
    For the Three Months
    Ended June 30,
STATEMENT OF OPERATIONS   2013   2012
Total Interest Income   $1,693   $1,646
Total Interest Expense   118   152
Net Interest Income   1,575   1,494
Non‐Interest Income   610   382
Total Income   2,185   1,876
Non‐Interest Expense   1,611   1,708
Income Before Loan Loss Provision, Stock Options and Income Tax Expenses  
574
 
168
Provision for Loan Losses   0   0
Stock Option Expense   7   4
Income Tax Expense   0   0
Net Income   $567   $164
EPS   $0.13   $0.04
         
         
         
         
    For the Six Months
Ended June 30,
STATEMENT OF OPERATIONS   2013   2012
Total Interest Income   $3,340   $3,394
Total Interest Expense   238   318
Net Interest Income   3,102   3,076
Non‐Interest Income   928   781
Total Income   4,030   3857
Non‐Interest Expense   3,213   3,365
Income Before Loan Loss Provision, Stock Options and Income Tax Expenses  
817
 
492
Provision for Loan Losses   0   0
Stock Option Expense   15   9
Income Tax Expense   0   0
Net Income   $802   $483
EPS   $0.18   $0.11
         
         
Contact:
For more information, contact:
Pacific Commerce Bank
Richard Koh
Chief Financial Officer
213‐617‐0082
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