HILLSBORO, OR -- (Marketwired) -- 07/21/16 -- Premier Commercial Bancorp (OTC PINK: PRCB), a single bank holding company for Premier Community Bank based in Hillsboro, Oregon, today reported net income of $1.5 million, or $0.26 per diluted share, for the six months ended June 30, 2016, a 34.8% increase over the net income of $1.1 million, or $0.19 per diluted share, for the same six month period during 2015.
Highlights for the period included:
- Loan growth of $24.1 million, or 8.3%, for the six months year-to-date 2016 and $40.6 million, or 14.9% over the past twelve months.
- Core deposit growth of $24.6 million over the past twelve months and the mix continues to improve as time deposits were 25.3% of total deposits as of June 30, 2016 compared to 31.8% as of June 30, 2015.
- Interest income on earning assets at $8.0 million for the first six months of 2016 was up $896,000, or 12.6%, when compared to the same six month period of 2015 while interest expense over the comparable periods was relatively unchanged. As a result, net interest income for the first six months of 2016 at $7.0 million was $921,000, or 15.0%, higher than the $6.1 million for the first six months of 2015.
- Net interest margin at 4.30% year-to-date 2016 was up 30 basis points relative to the 4.00% for the same period of 2015.
- ROE and ROA for the first six months of 2016 were 9.02% and 0.87%, respectively, compared to 7.36 % and 0.68% for the first six months of 2015.
"The Company's accomplishments during the first half of 2016 and throughout 2015 have been significant. Loan momentum is strong, core deposit growth continues, and asset mix has improved to drive earnings to the next level. All of our offices are performing well and the markets in which they operate, Hillsboro, Beaverton, Forest Grove, Tigard, and Newberg remain sound. Our foundation is strong and I see very limited hurdles to this momentum as we forge ahead," stated Rick A. Roby, the Company's President and CEO.
Earnings
The Company's net income at $1.5 million for the first six months of 2016 increased $395,000, or 34.8% when compared to the $1.1 million for the first six months of 2015. Driving the increase in profitability was loan growth over the past year which resulted in an $896,000 increase in interest on earning assets for the first six months of 2016 relative to 2015 and interest expense was relatively unchanged for the same periods. The increase in loans reduced low yielding excess cash such that the yield on earning assets for the first six months of 2016 was 4.89%, up 24 basis points when compared to the 4.65% for the prior year six month period while the year-to-date 2016 cost of funds at 0.83% was down slightly relative to the 0.85% for the prior year period. As a result, net interest margin year-to-date 2016 was 4.30% relative to 4.00% for the same period last year.
Non-interest income was relatively unchanged for the first six months of 2016 relative to same period of 2015 and when comparing the first and second quarters of 2016. Non-interest expense has increased $249,000, or 5.1% for the first six months of 2016 relative to 2015 due primarily from an increase in employee related costs and professional services.
Net income for second quarter 2016 at $756,000 was down $19,000, or 2.5% compared to the prior quarter's $775,000 as the during the first quarter 2016 the Bank had non-recurring gains on the sale of OREO and loan prepayment fees (which also drove the higher net interest margin for first quarter 2016 of 4.32% compared to 4.27% for second quarter).
The Company's return on equity increased to 9.02% for first six months of 2016 compared to 7.36% for the same six month period of 2015; and its return on assets also rose to 0.87% for the first six months of 2016 relative to 0.68% for the same period of 2015.
Assets
Total assets as of June 30, 2016 were $360.0 million which was a $13.5 million or 3.9% increase from to the $346.5 million as of December 31, 2015, and a $12.2 million or 3.5% increase relative to the June 30, 2015 total of $347.8 million. Loans grew $24.1 million, or 8.3%, during the first six months of the year to $313.2 million as of June 30, 2016 and grew $40.6 million, or 14.9%, over the past twelve months when compared to the $272.6 million outstanding as of June 30, 2015. Loan growth over these periods was funded by continued reductions in excess cash levels and from increases in core deposits. Regarding loan growth, the Company's Chief Credit Officer, Fred Johnson, stated, "Our team of lenders has remained diligent and steadfast with our existing clients and prospects over the past several years, and with the improved economy and increased business optimism, opportunities are there for us and despite a very competitive environment, we have had considerable successes as evidenced by the strong net growth in the Bank's outstanding loans." And Mr. Johnson further commented, "Credit quality remains sound while our pipeline remains solid and the lending team continues to have a positive outlook, however as our loan portfolio grows, routine loan repayments, especially in the Bank's construction portfolio, and unscheduled prepayments will increase and challenge net loan growth rates in the future compared to those over the past year or so."
Loan growth over the past twelve months has come from all major categories. Outstanding non-real estate commercial and industrial (C&I) loans grew $9.8 million or 12.7% to $86.4 million as of June 30, 2016, owner-occupied commercial real estate loans grew $17.5 million or 21.8% to $97.7 million, non-owner-occupied commercial real estate loans grew $9.7 million or 19.1% to $60.8 million, while construction loans grew $11.1 million or 36.0% over the past year to $41.9 million. At June 30, 2016 as a percentage of the total loan portfolio, non-real estate commercial and industrial (C&I) loans were 27.6%, owner- occupied commercial real estate loans were 31.2%, non-owner-occupied commercial real estate loans were 19.4% and construction loans were 13.4%.
At $4.3 million, the allowance for loan losses as of June 30, 2016 was consistent with the prior year-end and June 30, 2015 amounts, however with the continued increase in loans, the allowance for loan losses as a percentage of outstanding loans decreased to 1.39% as of June 30, 2016 compared to 1.51% and 1.59% as of December 31, 2015 and June 30, 2015, respectively. For the first six months of 2016, the Bank had $46,000 in loan charge-offs and $15,000 in recoveries, or $31,000 in net charge-offs; while for the full year of 2015, the Bank had net charge-offs of $7,000 as the result of $98,000 in loan charge-offs and $91,000 in recoveries. The Bank had no loan loss provision expense for the first six months of 2016 or for the full-year 2015. Bob Ekblad, the Company's Chief Financial Officer commented, "Activity in the Bank's allowance for loan losses has been minimal for the first six months of 2016 and for all of 2015 as net charge-offs over these periods were negligible and the Bank made no contributions to the allowance because prior excess reserves and the continued improvements in the credit quality metrics of the loan portfolio, which reduces existing reserve requirements, have both supported the increased reserve requirements brought about by the increase in outstanding loans; however, this trend can't continue forever, and with continued loan growth, increases to the allowance for loan losses through provision expenses will likely begin soon."
As of June 30, 2016, the Bank had $103,000 in loans past due over 30 days and still accruing interest compared to December 31 and June 30, 2015 when the Bank had no loans and $1.1 million of loans that were past due over 30 days and still accruing interest, respectively. Non-performing assets (consisting of loans on nonaccrual status and other real estate owned-OREO) were $7.0 million as of June 30, 2016 compared to $7.3 million as of December 31, 2015, and were down $1.3 million, or 16.4%, over the past twelve months when compared to the $8.3 million as of June 30, 2015. As of June 30, 2016 the Bank had one loan for $2.9 million in non-accrual status while OREO was $4.1 million and consisted of four properties with carrying amounts ranging from $183,000 to $2.8 million.
Deposits
Deposits totaled $289.4 million as of June 30, 2016 which was a $16.2 million, or 5.9%, increase when compared to $273.2 million as of the December 31, 2015, or an $11.9 million and 4.3%, increase from the $277.5 million as of June 30, 2015. Bob Ekblad added, "Despite some volatility in the Bank's core deposits over these reporting periods and the strategic reduction over the past year of non-traditional out-of-area time deposits, total deposits continue to increase and support loan growth." Mr. Ekblad continued, "In fact, if you exclude the planned reductions in the Bank's non-traditional out-of-area time deposits, core deposit growth trends remain very strong at $24.6 million over the past twelve months. And as most of this core deposit growth has been in non-interest or low-interest bearing transaction accounts, the Bank's deposit mix continues to improve. In fact, as of June 30, 2016 time deposits were down to 25.3% of total deposits compared to 31.8% a year ago." As of June 30, 2016, the Bank's demand deposits and NOW accounts totaled $103.2 million, or 35.7% of total deposits, money market and savings accounts were $112.8 million, or 39.0% of total deposits, and time deposits aggregated to $73.4 million, or 25.3% of total deposits. This compares favorably to June 30, 2015 when the Bank's demand deposits and NOW accounts totaled $88.9 million, or 32.0% of total deposits, money market and savings accounts were $100.3 million, or 36.2% of total deposits, and time deposits were $88.3 million, or 31.8% of total deposits.
As of June 30, 2016, the Bank had $2.1 million in reciprocal brokered deposits, a $5.0 million wholesale brokered time deposit, and other non-traditional out-of-area time deposits of $21.7 million, which in aggregate was down from the June 30, 2015 amounts of $2.0 million in reciprocal brokered deposits and no wholesale time deposits, but $39.4 million in other non-traditional out-of-area time deposits.
Borrowings, Equity and Capital
With the exception of repurchase agreements, outstanding borrowings as of June 30, 2016 have remained consistent with the December 31 and June 30, 2015 amounts. The Bank continues to reduce repurchase agreements as they are more expensive and less advantageous to the Bank than traditional deposits; they were down to $1.7 million as of June 30, 2016 compared to $5.4 million this time last year and $6.3 million at year-end 2015. Federal Home Loan Bank (FHLB) borrowings at $21.6 million as of June 30, 2016 have remained unchanged relative to prior reporting periods. The Bank's FHLB borrowings consists of eight separate notes at a weighted average cost of 2.68% with rates ranging from 1.08% to 3.28% and maturities that range from December 2017 to April 2020. The Company's junior subordinated debentures of $8.2 million as of June 30, 2016 and prior periods are long-term variable rate debt at the holding company for which the proceeds were down streamed to the Bank as capital. The Company has two separate junior subordinated debentures, one for $3.1 million at a current rate of 3.79% and the other for $5.1 million at a current rate of 2.55%.
At the Bank level, its Tier 1 Leverage Ratio has steadily risen over the past six and twelve months as retained earnings have outpaced overall asset growth. The Bank's Tier 1 Leverage Ratio was 11.84% as of June 30, 2016 compared to 11.55% and 11.33% as of December 31 and June 30, 2015, respectively. However, with the change of mix in the balance sheet from the reduction of cash and increase in loans, the Bank's Total Risk-Based Capital Ratios have decreased from 13.57% and 13.28% as of June 30 and December 31, 2015, respectively, to 12.75% as of June 30, 2016. 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)
June 30, % Change December 31, % Change
2016 vs. Year-to-
2016 2015 2015 2015 Date
---------- ---------- -------- ------------ --------
ASSETS
Cash & due from
banks $ 12,503 $ 40,453 -69.1% $ 21,372 -41.5%
Investment
securities -
available for
sale 16,655 15,880 4.9% 18,111 -8.0%
Investments -
other 2,993 3,251 -7.9% 3,232 -7.4%
Gross loans 313,190 272,597 14.9% 289,128 8.3%
Allowance for
loan losses (4,338) (4,323) 0.3% (4,369) -0.7%
---------- ---------- -------- ------------ --------
Net loans 308,852 268,274 15.1% 284,759 8.5%
Other real
estate owned 4,080 4,658 -12.4% 4,241 -3.8%
Other assets 14,889 15,270 -2.5% 14,808 0.5%
---------- ---------- -------- ------------ --------
Total Assets $ 359,972 $ 347,786 3.5% $ 346,523 3.9%
========== ========== ======== ============ ========
LIABILITIES
Deposits $ 289,415 $ 277,471 4.3% $ 273,220 5.9%
Repurchase
agreements 1,723 5,426 -68.2% 6,328 -72.8%
FHLB borrowings 21,550 21,550 0.0% 21,550 0.0%
Other borrowings - - 0.0% - 0.0%
Junior
subordinated
debentures 8,248 8,248 0.0% 8,248 0.0%
Other
liabilities 4,302 3,609 19.2% 4,081 5.4%
---------- ---------- -------- ------------ --------
Total
Liabilities 325,238 316,304 2.8% 313,427 3.8%
STOCKHOLDERS'
EQUITY 34,734 31,482 10.3% 33,096 4.9%
---------- ---------- -------- ------------ --------
Total
Liabilities and
Stockholders'
Equity $ 359,972 $ 347,786 3.5% $ 346,523 3.9%
========== ========== ======== ============ ========
Shares outstanding
at end-of-period 5,840,609 5,795,415 5,824,541
Book value per
share $ 5.95 $ 5.43 $ 5.68
Allowance for loan
losses to total
loans 1.39% 1.59% 1.51%
Non-performing
assets (non-
accrual loans &
OREO) $ 6,956 $ 8,320 $ 7,285
Bank Tier 1
leverage ratio 11.84% 11.33% 11.55%
Bank Tier 1 risk-
based capital
ratio 11.50% 12.31% 12.03%
Bank Total risk-
based capital
ratio 12.75% 13.57% 13.28%
Consolidated Statements of Net Income
Unaudited
(amounts in 000s, except per share data and ratios)
Three Months Ended Six Months Ended
-------------------- -------------------- ------
% %
6/30/2016 3/31/2016 Change 6/30/2016 6/30/2015 Change
--------- --------- ------ --------- --------- ------
INTEREST INCOME
Loans $ 3,896 $ 3,873 0.6% $ 7,769 $ 6,858 13.3%
Investments -
available for
sale 88 93 -5.4% 181 203 -10.8%
Federal funds
sold and
other 27 50 -46.0% 77 70 10.0%
--------- --------- ------ --------- --------- ------
Total
interest
income 4,011 4,016 -0.1% 8,027 7,131 12.6%
--------- --------- ------ --------- --------- ------
INTEREST EXPENSE
Deposits 278 279 -0.4% 557 556 0.2%
Repurchase
agreements
and federal
funds
purchased 3 3 0.0% 6 9 -33.3%
FHLB
borrowings 145 146 -0.7% 291 277 5.1%
Other
borrowings - - 0.0% - 51 -100.0%
Junior
subordinated
debentures 63 61 3.3% 124 110 12.7%
--------- --------- ------ --------- --------- ------
Total
interest
expense 489 489 0.0% 978 1,003 -2.5%
--------- --------- ------ --------- --------- ------
NET INTEREST
INCOME BEFORE
LOAN LOSS
PROVISION 3,522 3,527 -0.1% 7,049 6,128 15.0%
PROVISION FOR
LOAN LOSSES - - 0.0% - - 0.0%
--------- --------- ------ --------- --------- ------
NET INTEREST
INCOME AFTER
LOAN LOSS
PROVISION 3,522 3,527 -0.1% 7,049 6,128 15.0%
NON-INTEREST
INCOME 176 170 3.5% 346 324 6.8%
NON-INTEREST
EXPENSE 2,518 2,594 -2.9% 5,112 4,863 5.1%
INVESTMENTS-
REALIZED GAINS
/ (LOSSES) - - 0.0% - 3 -100.0%
OREO VALUATION
ADJ. &
GAINS/(LOSSES)
ON SALES - NET - 112 -100.0% 112 146 -23.3%
--------- --------- ------ --------- --------- ------
INCOME BEFORE
PROVISION FOR
INCOME TAXES 1,180 1,215 -2.9% 2,395 1,738 37.8%
PROVISION FOR
INCOME TAXES 424 440 -3.6% 864 602 43.5%
--------- --------- ------ --------- --------- ------
NET INCOME $ 756 $ 775 -2.5% $ 1,531 $ 1,136 34.8%
========= ========= ====== ========= ========= ======
Earnings per
share - Basic $ 0.13 $ 0.13 $ 0.26 $ 0.19
Earnings per
share - Diluted $ 0.13 $ 0.13 $ 0.26 $ 0.19
Return on
average equity 8.80% 9.24% 9.02% 7.36%
Return on
average assets 0.85% 0.89% 0.87% 0.68%
Net interest
margin 4.27% 4.32% 4.30% 4.00%
Efficiency ratio 68.1% 70.2% 69.1% 75.4%
CONTACT:
Rick A. Roby
President and Chief Executive Officer
503-693-7500
rick.roby@pcboregon.com
