Pacific Commerce Bank Reports Strong First Quarter Growth and Profitability

Marketwired

LOS ANGELES, CA--(Marketwired - Apr 24, 2014) - Pacific Commerce Bank (OTCQB: PFCI) today reported financial results for the first quarter of 2014 that reflected net income after tax of $891,000 along with another solid quarter of loan growth. This compares favorably to net income of $235,000 in the first quarter of 2013. Loans outstanding grew $12.2 million, or 8.4% in the first quarter and have increased $28.7 million, or 22.2% since the first quarter of 2013. 

CEO Scott R. Andrews commented, "The first quarter of 2014 was very productive with $22.6 million in new loan originations. Business development efforts have continued to result in significant new customer acquisitions in both the greater Los Angeles and San Diego County markets. Efforts to bolster core deposit growth include the hiring of a deposit-focused Relationship Officer for the Bank's West Los Angeles market. The establishment of our new full-service branch office in San Diego County will also increase core deposit growth opportunities in that market." 

Andrews further commented, "Future earnings growth will be supplemented by an active SBA 7(a) lending program, with additional SBA business development resources being deployed in the second quarter focusing on the Los Angeles market. Pacific Commerce Bank is well positioned to continue the robust organic growth experienced over the past year, and with our asset quality issues fully behind us, the focus and attention of management is to increase revenues while continuing to control expenses."

Chairman Thomas Iino commented, "Results for the first quarter of 2014 put Pacific Commerce Bank on track for a solid year of balance sheet growth and improved core earnings. The Board of Directors continues to focus on providing meaningful shareholder returns over the long-term, and with pursuing in-market opportunities for strategic mergers and acquisitions in 2014." 

FINANCIAL RESULTS
Net income for the first quarter of 2014 was supplemented by a reversal of $1.5 million in loan loss provision, due to the significant improvement in asset quality of the Bank. Net interest income increased $109,000, or 7.2% from the prior quarter as a result of the strong loan growth experienced in the first quarter, and the continuing reduction in cost of funds. Non-interest expense declined $382,000, or 17.4% from the prior quarter, which included extraordinary, one-time expenses related to the sale of a large OREO property in November. Investments in new technologies in the fourth quarter and the hiring of additional business development personnel in the first quarter of 2014 drove other non-interest expenses higher than the prior period. Non-interest income declined quarter-over-quarter due to the aforementioned OREO sale. Revenue from the sale of SBA loans in the first quarter was below prior quarter levels, which was the result of a management decision to defer eligible loans for sale into the second quarter.

Net interest margin for the first quarter was 3.95%, an improvement from the 3.83% reported for the prior quarter. This was the result of a higher yield on earning assets of 4.20% versus 4.10% and a lower cost of funds of 0.28% versus 0.30%. Mirroring the industry trend of shrinking margins, on a year-over-year basis the NIM declined from 4.12% a year ago, although the Bank's cost of funds declined from 0.37% to 0.28%, a 24% reduction.

Total asset growth was $13.9 million, or 8.0% for the first quarter, and $27.6 million, or 17.3% growth from a year ago. Asset growth was centered in loans outstanding, as previously mentioned, totaling $12.2 million for the quarter, and $28.7 million from the prior year. The Bank sold its one remaining OREO property at a small gain on sale in the first quarter, for a reduction of $2.6 million in OREO versus the prior year.

As of March 31, 2014, total deposits were up $8.4 million from the same time last year, with core deposits increasing $15.2 million or 20%. Time deposits, predominantly from institutional depositors, declined $6.8 million as the Bank concentrated on attracting core deposits and reducing its funding costs. On a monthly average basis, first quarter deposits increased $3.1 million, or 2.1% and monthly average core deposits increased $15.9 million, or 21% year-over-year. To supplement on-balance sheet liquidity, FHLB borrowings were utilized in the first quarter, with outstanding short-term advances totaling $13.5 million at quarter-end.

Asset quality remains stable, with only three non-accrual loans totaling $477,000 as of quarter-end. The Bank has no OREO properties and has an NPA ratio of 0.25% versus 2.43% one year ago and 0.29% at the prior quarter. 

During the first quarter of 2014, Pacific Commerce Bank exited the United States Treasury Department's Capital Purchase Program (TARP) via the Treasury's auction process. The Bank's preferred shares were purchased by three unaffiliated parties, who continue to hold the non-cumulative, perpetual preferred shares. No preferred dividends were paid in February, and none are planned for the future, as the Bank looks to retain its Tier 1 equity for on-going growth initiatives.

Pacific Commerce Bank is well capitalized and poised for future growth opportunities. The Bank's regulatory capital ratios are as follows:

             
    3/31/2014   12/31/2013   3/31/2013
Tier 1 Leverage Ratio:   14.20%   14.06%   13.70%
Tier 1 Risk-Based Capital Ratio:   15.59%   15.67%   16.98%
Total Risk-Based Capital Ratio:   16.85%   16.95%   18.26%
             

About Pacific Commerce Bank
Established in 2002, Pacific Commerce Bank is a business-oriented community bank with offices in downtown Los Angeles, West Los Angeles, and San Diego. 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; demand for loan products; deposit flows; its ability to develop and implement new technologies; and other factors. 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   3/31/2014     12/31/2013     3/31/2013  
Total Assets   $ 187,093     $ 173,154     $ 159,509  
Total Investments   $ 1,159     $ 1,219     $ 6,229  
Gross Loans   $ 158,535     $ 146,303     $ 129,849  
Allowance for Loan Losses   $ (3,537 )   $ (5,006 )   $ (4,731 )
Other Real Estate Owned   $ 0     $ 244     $ 2,581  
Core Deposits   $ 91,487     $ 92,546     $ 76,260  
Total Deposits   $ 145,361     $ 145,516     $ 136,980  
Total Borrowings   $ 13,500     $ 0     $ 0  
Total Stockholders' Equity   $ 27,115     $ 26,204     $ 21,469  
Net (Recoveries)/ Charge-offs   $ (31 )   $ (303 )   $ (28 )
Total Non-Accrual Loans   $ 477     $ 264     $ 1,298  
ALLL / Total Loans     2.23 %     3.42 %     3.64 %
ALLL / Non-Accrual Loans     742 %     1,894 %     365 %
                         
                         
     
    For the Three Months Ended
STATEMENT OF OPERATIONS   3/31/14     12/31/13     3/31/13
Total Interest Income   $ 1,753     $ 1,633     $ 1,642
Total Interest Expense     104       107       120
Net Interest Income     1,649       1,526       1,522
Non-Interest Income     144       797       323
Total Income     1,793       2,323       1,845
Non-Interest Expense     1,815       2,198       1,610
Income Before Loan Loss Provision and Income Taxes     (22 )     125       235
Provision for Loan Losses     (1,500 )     0       0
Income Tax Expense     587       390       0
Net Income   $ 891     $ (266 )   $ 235
EPS   $ 0.20     $ (0.06 )   $ 0.05
                       
                       
Contact:
For more information, contact:
Pacific Commerce Bank
Richard Koh
Chief Financial Officer
213-617-0082
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