Pacific Commerce Bancorp Announced First Quarter 2016 Earnings and Receipt of Federal Regulatory Approval for Acquisition of ProAmérica Bank

LOS ANGELES--()--Pacific Commerce Bancorp (PCBC) (the “Company”), parent company of Pacific Commerce Bank (the “Bank”), today reported strong first quarter results and that it has received approval from the Federal Reserve Bank of San Francisco for its previously announced acquisition of ProAmérica Bank. The acquisition is expected to close during the second quarter of 2016 and remains conditioned upon receiving shareholder and Department of Business Oversight approvals. Shareholder meetings for both companies are scheduled for the second week in May.

Financial Highlights for the First Quarter 2016

  • GAAP annualized return on average assets (ROAA) was 0.63%.
  • GAAP annualized return on average shareholder equity (ROAE) was 5.61%.
  • The net interest margin for the quarter was 4.41%.
  • Annualized growth in core, non-wholesale deposits was 21%.
  • Annualized growth in total loans other than warehouse lines was 9.5%.
  • Non-performing assets remain at $0.
  • Capital ratios exceed levels required to be considered “well capitalized.”

For the first quarter of 2016, the Company earned $556,000, or $0.08 per diluted share, after one-time merger related charges of $133,000, compared to $534,000, or $0.12 per diluted share, in the first quarter of 2015, after one-time merger related charges of $187,000 associated with the acquisition of Vibra Bank and a credit provision reversal of $500,000. The Company earned $631,000, or $0.09 per diluted share, after one-time merger related charges of $83,000, in the fourth quarter of 2015.

Frank J. Mercardante, Chief Executive Officer of the Company and Bank, said, “We are pleased to have started the year with a solid first quarter performance in all categories. Our loan pipeline remains very strong. In addition, we continue to exceed our new core deposit generation goals.”

INCOME STATEMENT

Net interest income increased in the first quarter of 2016 by 79% to $3.7 million from $2.1 million in the first quarter of 2015. The net interest margin improved during the quarter by 41 basis points to 4.41% from 4.00% in the first quarter of 2015. In the fourth quarter of 2015, net interest income equaled $3.4 million and the net interest margin was 4.13%.

Non-interest income increased in the first quarter of 2016 by 226% to $684,000 from $210,000 in the first quarter of 2015, with the largest increases coming from gain on sale of SBA loans and SBA loan servicing income. In the fourth quarter of 2015, non-interest income equaled $990,000, which included gain on sale of SBA loans of $500,000.

Non-interest expenses increased in the first quarter by 72% to $3.4 million from $2.0 million in the first quarter of 2015. Net of merger related expenses, non-interest expenses increased $1.5 million to $3.2 million from $1.8 million a year earlier with increases in salaries and benefits, occupancy expenses, legal and consulting, data processing, and network expenses representing the largest components of the increase.

BALANCE SHEET

Total assets at March 31, 2016, increased 1.7% to $359.5 million from $353.4 million at December 31, 2015. Total loans increased 0.3% to $307.6 million from $306.7 million at December 31, 2015. Excluding mortgage warehouse loans, total other loans increased by $7.0 million during the quarter for an annualized growth rate of 9.5%. Mortgage warehouse lines decreased $6.1 million during the current quarter, while commercial real estate loans increased $8.2 million.

Total non-interest bearing demand deposits increased $19.3 million, or 17.2%, to $131.2 million at March 31, 2016, from $112.0 million at December 31, 2015. The strong increase in demand deposits helped to reduce the Bank’s wholesale time deposits by $7.0 million in the quarter. Total deposits at March 31, 2016, were up by $2.8 million to $286.3 million from $283.5 million at December 31, 2015.

CREDIT QUALITY

The Bank had no nonaccrual loans as of March 31, 2016, compared to $2,000 as of December 31, 2015. Overall credit quality remained strong during the quarter, resulting in the determination by management that no provision for the allowance for loan and lease loss was required.

Excluding loans acquired in the Vibra Bank merger, and loans held for sale, the allowance for loan and lease losses to total loans as of March 31, 2016, was 1.43%, versus 1.51% as of December 31, 2015. In addition, loans acquired in the Vibra Bank merger totaling $74.6 million at the end of the quarter are carried at a discount of $595,000 as required by GAAP. Total loans held for sale equaled $12.6 million at the end of the quarter, of which mortgage loans held for sale was $3.2 million which were held at a discount of 2.00% to the face value of the note.

REGULATORY CAPITAL

Both the Company and Bank remained “well capitalized” by regulatory definition with capital ratios, as of March 31, 2016, as follows:

                          Company           Bank
Tier 1 Leverage Ratio: 10.25% 11.22%
Common Equity Tier 1 Capital Ratio: 11.55% 12.64%
Tier 1 Capital Ratio: 11.55% 12.64%
Total Capital Ratio: 12.58% 13.67%
 

About Pacific Commerce Bancorp

Pacific Commerce Bancorp is the parent company for Pacific Commerce Bank. Pacific Commerce Bank provides complete deposit and loan banking solutions to small businesses, professionals and high net worth individuals from Los Angeles to the Mexican border. The Bank is a Preferred SBA Lender and operates offices in Downtown Los Angeles, West Los Angeles, Pasadena, San Diego and Chula Vista. Pacific Commerce Bancorp’s common stock is publicly traded on the Over the Counter Market under the ticker symbol “PCBC.” For more information please visit our website at 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.

Additional Information about the Proposed Transaction and Where to Find It

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed transaction, Pacific Commerce Bancorp prepared and filed with the California Department of Business Oversight certain applications containing, among other things, a joint proxy statement/prospectus and other documents with respect to the proposed Merger. INVESTORS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER RELEVANT DOCUMENTS PROVIDED BY PACIFIC COMMERCE BANCORP, PACIFIC COMMERCE BANK, AND PROAMÉRICA BANK IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

Investors may obtain free copies of the joint proxy statement/prospectus and other relevant documents prepared by Pacific Commerce Bancorp and ProAmérica Bank free of charge by contacting Pacific Commerce Bancorp at 213-417-0164 or ProAmérica Bank at 213-613-5000.

                       

Pacific Commerce Bancorp

Consolidated Selected Financial Data – Unaudited

(Amounts are in thousands, except for book value per share and shares outstanding data)

 
BALANCE SHEET

March 31,

2016

March 31,

2015

% Change

December 31,

2015

Assets
Cash and due from banks $ 29,829 $ 2,292 1201.4 % $ 23,293
Federal funds sold 8,584 16,240 -47.1 % 9,592
Investment securities 212 517 -59.0 % 252
Mortgage warehouse loans held for sale 3,205 0 100.0 % 9,288
Other loans held for sale 9,399 5,051 86.1 % 8,389
Loans, net of unearned income 295,042 188,368 56.6 % 289,020
Less: Allowance for loan losses (3,156 ) (2,914 ) 8.3 % (3,066 )
Net Loans 304,490 190,505 59.8 % 303,631
Other assets 16,354 10,783 51.7 % 16,625
Total Assets $ 359,469 $ 220,337 63.1 % $ 353,393
 
Liabilities

Non-interest bearing deposits

$ 131,230 $ 41,547 215.9 % $ 111,963
Interest-bearing deposits 155,066 136,235 13.8 % 171,572
Total deposits 286,296 177,782 61.0 % 283,535
Borrowings 31,934 16,000 99.6 % 29,430
Accrued interest and other liabilities 1,306 799 63.5 % 1,310
Total Liabilities 319,536 194,581 64.2 % 314,275
 
Shareholders' Equity
Common stock 41,422 28,751 44.1 % 41,162
Retained earnings (1,492 ) (3,007 ) -50.4 % (2,048 )
Other comprehensive income 3 12 -75.0 % 4
Total Shareholders' Equity 39,933 25,756 55.0 % 39,118
Total Liabilities & Shareholders' Equity $ 359,469 $ 220,337 119.3 % $ 353,393
 
Book value per share at end of period $ 6.08 $ 5.77 5.4 % $ 5.98
Tangible Book value per share at end of period $ 5.53 $ 5.77 -4.2 % $ 5.41
 
 
           

Pacific Commerce Bancorp

Consolidated Selected Financial Data – Unaudited

(Amounts are in thousands, except for earnings per share data)

 

For the Three Months

Ended March 31,

For the Three Months

Ended December 31,

 

2016       2015       % Change 2015       % Change

STATEMENT OF OPERATIONS

Total interest income $ 3,955 $ 2,194 80 % $ 3,624 9 %
Total interest expense   256   127   102 %   203 26 %
Net interest income 3,699 2,067 79 % 3,421 8 %
Provision for loan losses 0 (500 ) 0 % 0 0 %
Non-interest income 684 210 226 % 990 -31 %
Non-interest expense (non-merger related)   3,234   1,772   83 %   3,210 1 %
Income before merger related expenses and income taxes 1,149 1,005 14 % 1,201 -4 %
Non-recurring merger related expenses 133 187 -29 % 83 60 %
Income tax expenses   460   284   62 %   487 -6 %
Net income $ 556 $ 534   4 % $ 631 -12 %
 
Basic earnings per share $ 0.08 $ 0.12 -33 % $ 0.10 -20 %
Diluted earnings per share $ 0.08 $ 0.12 -33 % $ 0.09 -11 %
Average shares outstanding 6,557,723 4,461,255 6,543,701
 

Contacts

Pacific Commerce Bancorp
Richard Koh, Chief Financial Officer
213-617-0082

Contacts

Pacific Commerce Bancorp
Richard Koh, Chief Financial Officer
213-617-0082