Exhibit 99.1
NEWS RELEASE
| FOR MORE INFORMATION CONTACT: | Michael Dunne | |
| Public Information Officer | ||
| 541-338-1428 | ||
| www.therightbank.com | ||
| Email: michael.dunne@therightbank.com | ||
FOR IMMEDIATE RELEASE
Pacific Continental Corporation Reports Third Quarter Results
Balance sheet expansion driven by both organic growth and acquisition
EUGENE, Ore., October 26, 2016 –Pacific Continental Corporation (Nasdaq: PCBK), the holding company of Pacific Continental Bank, today reported financial results for the third quarter ended September 30, 2016.
Third Quarter Highlights:
| • | On September 6, 2016, completed the acquisition of Foundation Bank, a business bank located in Bellevue, WA with approximately $450.0 million in assets at closing. Successful core systems integration completed on October 10, 2016. |
| • | Quarterly organic loan growth of $52.1 million. |
| • | Quarterly organic core deposit growth of $144.8 million. |
| • | Net income of $4.9 million, or $0.23 per diluted share. |
| • | Tax-equivalent net interest margin of 4.22%. |
| • | Paid third quarter 2016 regular quarterly cash dividend of $0.11 per share. |
| • | Recognized by Portland Business Journal with the Healthiest Companies Award. |
| • | Recognized by 425 Business Magazine with the 30-Under-30 Award. |
Net Income Highlights
Net income for the third quarter 2016 was $4.9 million, or $0.23 per diluted share, and included non-core costs associated with our acquisition of Foundation Bank, which were approximately $1.8 million, or approximately $0.06 per diluted share. Also included in third quarter results was $589 thousand, or $0.03 per diluted share, of net income related to the Foundation Bank operations from the time of transaction closing on September 6, 2016. The provision for loan losses expense in the third quarter was $1.4 million, compared to $2.0 million for the second quarter.
Annualized returns on average assets, average equity and average tangible equity for third quarter 2016 were 0.89%, 8.05%, and 10.14%, respectively, compared to 0.53%, 4.67%, and 5.80% for second quarter 2016. Annualized returns on average assets, average equity, and average tangible equity for the nine months ended September 30, 2016 were 0.85%, 7.55%, and 9.43%, respectively, compared to 1.01%, 8.60%, and 10.62% for the same time period in 2015.
“This was a milestone quarter, as we successfully completed the acquisition and integration of Foundation Bank, which has significantly increased our presence and market share in the vibrant Puget Sound region,” said Roger Busse, chief executive officer. “We are proud of our management teams and leadership across all regions, as we continued to drive solid organic growth and earnings.”
Third quarter 2016 noninterest income was $1.9 million, an increase of $172 thousand from the second quarter 2016. Approximately $55 thousand of the increase related to operating income from Foundation Bank while the remainder was due to a one-time payment of $160 thousand received from the Small Business Administration, related to expense reimbursement incurred by a previously acquired bank. There were no gains on sales of securities during the third quarter, compared to $71 thousand during the second quarter.
Noninterest expense for the third quarter 2016 was $13.8 million, this represented a decrease of $1.1 million from the second quarter of 2016, with $556 thousand of the savings resulting from decreased reserving related to our partially self-funded health insurance plan, and $571 thousand resulting from decreased legal and professional expenses. During the second quarter we recorded $550 thousand of additional reserve expense related to higher than forecasted claim activity in our partially self-funded health insurance plan. Claim activity returned to more normal levels for the third quarter. The decrease in legal and professional expenses related to the annual director’s equity grant of $240 thousand that occurred during the second quarter and lower legal bills related to other projects.
Net Interest Margin
The third quarter 2016 net interest margin was 4.22%, a decrease of 5 basis points from the second quarter net interest margin. As we stated during our second quarter earnings call, we anticipated some margin compression during the third quarter and going forward, due primarily to the increased interest expense from our subordinated notes offering in the second quarter 2016. The impact of the interest expense associated with the subordinated debt was approximately 11 basis points during the third quarter. Accretion income for the third quarter 2016 was $877 thousand compared to $156 thousand for the second quarter 2016. As outlined below, the core margin was 3.99% for the third quarter 2016 compared to 4.20% for the second quarter 2016.
| Dollars in thousands | ||||||||||||||||||||||||
| Third Quarter 2016 | Second Quarter 2016 | |||||||||||||||||||||||
| Average Balance | Income (Expense) | Yield | Average Balance | Income (Expense) | Yield | |||||||||||||||||||
Federal funds sold and interest-bearing deposits | $ | 28,811 | $ | 40 | 0.55 | % | $ | 15,597 | $ | 19 | 0.49 | % | ||||||||||||
Federal Home Loan Bank stock | 6,975 | 46 | 2.62 | % | 7,004 | 20 | 1.15 | % | ||||||||||||||||
Securities available-for-sale(1) | 421,085 | 2,691 | 2.54 | % | 385,777 | 2,550 | 2.66 | % | ||||||||||||||||
Net loans (2) | 1,558,018 | 19,315 | 4.93 | % | 1,444,956 | 17,891 | 4.98 | % | ||||||||||||||||
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Earning assets | 2,014,889 | 22,092 | 4.36 | % | 1,853,334 | 20,480 | 4.44 | % | ||||||||||||||||
Interest bearing liabilities | 1,230,806 | (1,891 | ) | -0.61 | % | 1,121,088 | (1,137 | ) | -0.41 | % | ||||||||||||||
Core margin (non-GAAP) | 2,014,889 | 20,201 | 3.99 | % | 1,853,334 | 19,343 | 4.20 | % | ||||||||||||||||
Acquired loan accretion | 877 | 0.17 | % | 156 | 0.03 | % | ||||||||||||||||||
Prepayment penalties on loans | 276 | 0.05 | % | 166 | 0.04 | % | ||||||||||||||||||
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Net interest margin | $ | 2,014,889 | $ | 21,354 | 4.22 | % | $ | 1,853,334 | $ | 19,665 | 4.27 | % | ||||||||||||
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| (1) | Tax-exempt security income has been adjusted to a tax-equivalent basis at a 35% tax rate. The amount of such adjustment was an addition to recorded income of approximately $260 and $256 for the three months ended September 30, 2016 and June 30, 2016, respectively. Net interest margin was positively impacted by 5 and 6 basis points, respectively, in these periods. |
| (2) | Tax-exempt loan income has been adjusted to a tax-equivalent basis at a 35% tax rate. The amount of such adjustment was an addition to recorded income of approximately $323 and $262 for the three months ended September 30, 2016 and June 30, 2016, respectively. Net interest margin was positively impacted by 6 basis points in each period. |
Balance Sheet Highlights
Gross loans grew by $322.5 million in third quarter 2016, and totaled $1.81 billion at September 30, 2016. Included in the loan growth was $270.5 million of loans acquired in the Foundation Bank transaction. Organic loan growth was $52.1 million for the third quarter. Gross loan growth through the first nine months of 2016 was $402.6 million. Excluding the $270.5 million in acquired loans, our organic loan growth was $132.1 million, or 12.55% annualized. At September 30, 2016, loans to dental practitioners totaled $370.1 million and represented 20.46% of the loan portfolio. This represented an increase of $325 thousand over second quarter 2016, where loans to dental practitioners represented 24.88% of the loan portfolio.
Period-end Company-defined core deposits at September 30, 2016, were $2.05 billion, an increase of $541.3 million from the second quarter 2016. Included in the core deposit growth was $396.5 million of deposits acquired in the Foundation Bank transaction. Organic core deposit growth was $144.8 million for the third quarter, with $84.3 million, or 58.22%, of our growth coming from the large depositor portfolio. The increase from the large depositor portfolio was led by one client that increased its deposits by $64.3 million during the quarter. The increase was the result of a business sale and we anticipate that the majority of these funds will leave the Bank during the fourth quarter. Core deposit growth through the first nine months of 2016 was $515.4 million. Excluding the $396.5 million in acquired deposits, our organic core deposit growth was $118.9 million, or 10.35% annualized.
“We are proud of our outstanding team of bankers and they continue to produce solid organic loan growth”, said Casey Hogan, chief operating officer. “Our organic core deposit growth was outstanding in the third quarter and we are pleased that more than 40% of the growth came in our small depositor portfolio.”
Asset Quality
As of September 30, 2016, the allowance for loan losses as a percentage of outstanding loans was 1.14%, a decrease from the 1.29% reported at June 30, 2016. The decrease was largely the result of the Foundation Bank acquired loans included at their fair value, net of any credit risk adjustments. At September 30, 2016, the allowance for loan losses as a percentage of nonperforming loans, net of government guarantees, decreased to 210.23% from 1,172.72% at June 30, 2016. During the third quarter 2016, the Company recorded net recoveries of $24 thousand, compared to net loan losses of $419 thousand during the second quarter 2016. During the third quarter, the Company made a $1.4 million provision for loan losses compared to $2.0 million in the second quarter 2016.
At September 30, 2016, nonperforming assets, net of government guarantees, totaled $22.8 million, or 0.90% of total assets, compared to $13.7 million, or 0.68% of total assets, at June 30, 2016. The increase primarily related to loans and other real estate owned acquired in the Foundation Bank transaction. Nonperforming assets at September 30, 2016, were comprised of $9.8 million of nonperforming loans, net of government guarantees of $2.4 million, and $13.1 million in other real estate owned. Loans past-due 30-89 days were 0.01% of total loans at September 30, 2016, compared to 0.02% of total loans at June 30, 2016.
Capital Adequacy
The Company’s consolidated capital ratios continued to be above the minimum thresholds for the FDIC’s “well-capitalized” designation. At September 30, 2016, the Company’s capital ratios were as follows:
| September 30, 2016 | ||||||||||||
Minimum dollar requirements | Pacific Continental Corporation | Regulatory Minimum (Well- Capitalized) | Excess | |||||||||
Tier I capital (to leverage assets) | $ | 215,471 | $ | 104,329 | $ | 111,142 | ||||||
Common equity tier 1 capital (to risk weighted assets) | $ | 203,359 | $ | 140,135 | $ | 63,224 | ||||||
Tier I capital (to risk weighted assets) | $ | 215,471 | $ | 172,474 | $ | 42,997 | ||||||
Total capital (to risk weighted assets) | $ | 270,622 | $ | 215,593 | $ | 55,029 | ||||||
Minimum percentage requirements | Pacific Continental Corporation | Regulatory Minimum (Well- Capitalized) | ||||||||||
Tier I capital (to leverage assets) | 10.33 | % | 5.00 | % | ||||||||
Common equity tier 1 capital (to risk weighted assets) | 9.43 | % | 6.50 | % | ||||||||
Tier I capital (to risk weighted assets) | 9.99 | % | 8.00 | % | ||||||||
Total capital (to risk weighted assets) | 12.55 | % | 10.00 | % | ||||||||
Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles (GAAP), this press release contains certain non-GAAP financial measures. The Company believes that such non-GAAP financial measures provide investors with information useful in understanding the Company’s financial performance; however, readers of this release are urged to review these non-GAAP financial measures in conjunction with the GAAP results as reported.
Certain Financial measures such as tangible shareholders’ equity, and tangible assets, are considered non-GAAP measures. Management believes including non-GAAP measures along with GAAP measures provides investors with a broader understanding of capital adequacy, funding sources and revenue trends. Tangible shareholders’ equity is calculated as total shareholders’ equity less goodwill and core deposit intangible assets. Additionally, tangible assets are calculated as total assets less goodwill and core deposit intangible assets.
The following table presents a reconciliation of ending total shareholders’ equity (GAAP) to ending tangible shareholders’ equity (non-GAAP), and total assets (GAAP) to total tangible assets (non-GAAP):
| September 30, | June 30, | September 30, | ||||||||||
| 2016 | 2016 | 2015 | ||||||||||
| (In thousands) | ||||||||||||
Total shareholders’ equity | $ | 276,471 | $ | 226,426 | $ | 216,676 | ||||||
Subtract: | ||||||||||||
Goodwill | 61,436 | 40,027 | 39,075 | |||||||||
Core deposit intangible assets | 9,248 | 3,657 | 4,027 | |||||||||
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Tangible shareholders’ equity (non-GAAP) | $ | 205,787 | $ | 182,742 | $ | 173,574 | ||||||
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Total assets | $ | 2,539,060 | $ | 2,025,410 | $ | 1,878,283 | ||||||
Subtract: | ||||||||||||
Goodwill | 61,436 | 40,027 | 39,074 | |||||||||
Core deposit intangible assets | 9,248 | 3,657 | 4,028 | |||||||||
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Total tangible assets (non-GAAP) | $ | 2,468,376 | $ | 1,981,726 | $ | 1,835,181 | ||||||
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Conference Call and Audio Webcast
Management will conduct a live conference call and audio webcast for interested parties relating to the Company’s results for the third quarter 2016 on Thursday, October 27, 2016, at 11:00 a.m. Pacific / 2:00 p.m. Eastern. To listen to the conference call, interested parties should call: (855) 215-7498 Passcode: 1554389. Following the formal remarks, a question and answer session will be open to all interested parties. The webcast will be available via Pacific Continental’s websitewww.therightbank.com. To listen to the live audio webcast, click on the webcast presentation link on the Company’s home page a few minutes before the presentation is scheduled to begin. An audio webcast replay is typically available within twenty-four hours following the live webcast and will be archived for one year on the Pacific Continental website. Any questions regarding the conference call presentation or webcast should be directed to Shannon Coffin, executive administrative assistant, at 541-686-8685.
About Pacific Continental Bank
Pacific Continental Bank, the wholly-owned operating subsidiary of Pacific Continental Corporation, delivers highly personalized services through fifteen banking offices in Oregon and Washington. The Bank also operates loan production offices in Tacoma, Washington and Denver, Colorado. Pacific Continental, with slightly more than $2.5 billion in assets, has established one of the most unique and attractive metropolitan branch networks in the Pacific Northwest with offices in three of the region’s largest markets, including Seattle, Portland and Eugene. Pacific Continental targets the banking needs of community-based businesses, health care professionals, professional service providers and nonprofit organizations.
Since its founding in 1972, Pacific Continental Bank has been honored with numerous awards and recognitions from highly regarded third-party organizations includingThe Seattle Times, thePortland Business Journal, theSeattle Business magazine andOregon Business magazine. A complete list of the company’s awards and recognitions – as well as supplementary information about Pacific Continental Bank – can be found online atwww.therightbank.com. Pacific Continental Corporation’s shares are listed on the Nasdaq Global Select Market under the symbol “PCBK” and are a component of the Russell 2000 Index.
Forward-Looking Statement Safe Harbor
This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “anticipates,” “targets,” “expects,” “estimates,” “intends,” “plans,” “goals,” “believes” and other similar expressions or future or conditional verbs such as “will,” “should,” “would” and “could.” The forward-looking statements made represent Pacific Continental’s current estimates, projections, expectations, plans or forecasts of its future results and revenues, including but not limited to statements about performance, loan or deposit growth, net interest margin compression, strategic focus, capital position, liquidity, credit quality, credit quality trends, and the impact and effects of recent or pending acquisitions. These statements are not guarantees of future results or performance and involve certain risks, uncertainties and assumptions that are difficult to predict and are often beyond Pacific Continental’s control. Actual outcomes and results may differ materially from those expressed in, or implied by, any of these forward-looking statements. You should not place undue reliance on any forward-looking statement and should consider all of the following uncertainties and risks, as well as those more fully discussed under “Risk Factors”, “Business”, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Pacific Continental’s most recent Annual Report on Form 10-K, Quarterly
Report on Form 10-Q, and in any of Pacific Continental’s subsequent SEC filings, including the high concentration of loans of the Company’s banking subsidiary in commercial and residential real estate lending and in loans to dental professionals; adverse economic trends in the United States and the markets we serve affecting the Bank’s borrower base; continued erosion or sustained low levels of consumer confidence; changes in the Federal Reserve’s monetary policies and the regulatory environment and increases in associated costs, particularly ongoing compliance expenses and resource allocation needs; vendor quality and efficiency; the Company’s ability to control risks associated with rapidly changing technology both from an internal perspective as well as for external providers; operational systems or infrastructure failures; increased competition; fluctuating interest rates; a tightening of available credit; the potential adverse impact of legal or regulatory proceedings; and risks related to acquisitions, including integration, retention of key personnel and business, anticipated cost savings and results and performance of the acquired company or the combined entity. Pacific Continental Corporation undertakes no obligation to publicly revise or update any forward-looking statement to reflect the impact of events or circumstances that arise after the date of this release. This statement is included for the express purpose of invoking the PSLRA’s safe harbor provisions.
PACIFIC CONTINENTAL CORPORATION and subsidiary
Consolidated Income Statements
(Dollars in thousands, except share and per share amounts)
(Unaudited)
| Three months ended | Linked | Year over | ||||||||||||||||||
| September 30, | June 30, | September 30, | Quarter | Year | ||||||||||||||||
| 2016 | 2016 | 2015 | % Change | % Change | ||||||||||||||||
Interest and dividend income | ||||||||||||||||||||
Loans | $ | 20,145 | $ | 17,951 | $ | 17,240 | 12.22 | % | 16.85 | % | ||||||||||
Taxable securities | 1,995 | 1,838 | 1,713 | 8.54 | % | 16.46 | % | |||||||||||||
Tax-exempt securities | 482 | 476 | 490 | 1.26 | % | -1.63 | % | |||||||||||||
Federal funds sold and interest-bearing deposits with banks | 40 | 19 | 7 | 110.53 | % | 471.43 | % | |||||||||||||
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| 22,662 | 20,284 | 19,450 | 11.72 | % | 16.51 | % | ||||||||||||||
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Interest expense | ||||||||||||||||||||
Deposits | 984 | 797 | 854 | 23.46 | % | 15.22 | % | |||||||||||||
Federal Home Loan Bank & Federal Reserve borrowings | 286 | 282 | 227 | 1.42 | % | 25.99 | % | |||||||||||||
Subordinated debentures | 553 | — | — | NA | NA | |||||||||||||||
Junior subordinated debentures | 66 | 56 | 57 | 17.86 | % | 15.79 | % | |||||||||||||
Federal funds purchased | 2 | 2 | 4 | 0.00 | % | -50.00 | % | |||||||||||||
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| 1,891 | 1,137 | 1,142 | 66.31 | % | 65.59 | % | ||||||||||||||
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Net interest income | 20,771 | 19,147 | 18,308 | 8.48 | % | 13.45 | % | |||||||||||||
Provision for loan losses | 1,380 | 1,950 | 625 | -29.23 | % | 120.80 | % | |||||||||||||
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Net interest income after provision for loan losses | 19,391 | 17,197 | 17,683 | 12.76 | % | 9.66 | % | |||||||||||||
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Noninterest income | ||||||||||||||||||||
Service charges on deposit accounts | 717 | 688 | 703 | 4.22 | % | 1.99 | % | |||||||||||||
Bankcard income | 314 | 294 | 276 | 6.80 | % | 13.77 | % | |||||||||||||
Bank-owned life insurance income | 172 | 145 | 156 | 18.62 | % | 10.26 | % | |||||||||||||
Gain on sale of investment securities | — | 71 | 143 | -100.00 | % | -100.00 | % | |||||||||||||
Impairment losses on investment securities (OTTI) | (2 | ) | — | — | NA | NA | ||||||||||||||
Other noninterest income | 718 | 549 | 436 | 30.78 | % | 64.68 | % | |||||||||||||
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| 1,919 | 1,747 | 1,714 | 9.85 | % | 11.96 | % | ||||||||||||||
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Noninterest expense | ||||||||||||||||||||
Salaries and employee benefits | 7,520 | 8,005 | 6,822 | -6.06 | % | 10.23 | % | |||||||||||||
Premises and equipment | 1,202 | 1,087 | 1,148 | 10.58 | % | 4.70 | % | |||||||||||||
Data processing | 924 | 893 | 838 | 3.47 | % | 10.26 | % | |||||||||||||
Legal and professional fees | 569 | 1,140 | 496 | -50.09 | % | 14.72 | % | |||||||||||||
Business development | 460 | 516 | 369 | -10.85 | % | 24.66 | % | |||||||||||||
FDIC insurance assessment | 273 | 286 | 283 | -4.55 | % | -3.53 | % | |||||||||||||
Other real estate expense (income), net | 71 | (113 | ) | 122 | -162.83 | % | -41.80 | % | ||||||||||||
Merger related expenses (1) | 1,767 | 1,978 | — | -10.67 | % | NA | ||||||||||||||
Other noninterest expense | 1,039 | 1,140 | 1,104 | -8.86 | % | -5.89 | % | |||||||||||||
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| 13,825 | 14,932 | 11,182 | -7.41 | % | 23.64 | % | ||||||||||||||
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Income before provision for income taxes | 7,485 | 4,012 | 8,215 | 86.57 | % | -8.89 | % | |||||||||||||
Provision for income taxes | 2,634 | 1,406 | 2,890 | 87.34 | % | -8.86 | % | |||||||||||||
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Net income | $ | 4,851 | $ | 2,606 | $ | 5,325 | 86.15 | % | -8.90 | % | ||||||||||
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Earnings per share: | ||||||||||||||||||||
Basic | $ | 0.24 | $ | 0.13 | $ | 0.27 | 84.62 | % | -11.11 | % | ||||||||||
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Diluted | $ | 0.23 | $ | 0.13 | $ | 0.27 | 76.92 | % | -14.81 | % | ||||||||||
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Weighted average shares outstanding: | ||||||||||||||||||||
Basic | 20,511,392 | 19,697,314 | 19,591,666 | |||||||||||||||||
Common stock equivalents attributable to stock-based awards | 165,572 | 171,653 | 225,104 | |||||||||||||||||
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Diluted | 20,676,964 | 19,868,967 | 19,816,770 | |||||||||||||||||
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PERFORMANCE RATIOS | ||||||||||||||||||||
Return on average assets | 0.89 | % | 0.53 | % | 1.14 | % | ||||||||||||||
Return on average equity (book) | 8.05 | % | 4.67 | % | 9.91 | % | ||||||||||||||
Return on average equity (tangible)(2) | 10.14 | % | 5.80 | % | 12.42 | % | ||||||||||||||
Net interest margin - fully tax-equivalent yield(3) | 4.22 | % | 4.27 | % | 4.32 | % | ||||||||||||||
Efficiency ratio(4) | 60.24 | % | 70.60 | % | 55.12 | % | ||||||||||||||
| (1) | Represents expenses associated with the acquisition of Foundation Bank. |
| (2) | Tangible equity excludes goodwill and core deposit intangible assets related to acquisitions. |
| (3) | Net interest margin is reported on a tax-equivalent yield basis at a 35% tax rate. |
| (4) | Efficiency ratio is noninterest expense as a percent of net interest income (on a tax-equivalent basis) plus noninterest income. |
NA Not applicable
PACIFIC CONTINENTAL CORPORATION and subsidiary
Year-to-Date Consolidated Income Statements
(Dollars in thousands, except share and per share amounts)
(Unaudited)
| Nine months ended | Year over | |||||||||||
| September 30, | Year | |||||||||||
| 2016 | 2015 | % Change | ||||||||||
Interest and dividend income | ||||||||||||
Loans | $ | 55,810 | $ | 48,020 | 16.22 | % | ||||||
Taxable securities | 5,551 | 4,825 | 15.05 | % | ||||||||
Tax-exempt securities | 1,435 | 1,491 | -3.76 | % | ||||||||
Federal funds sold and interest-bearing deposits with banks | 104 | 23 | 352.17 | % | ||||||||
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| 62,900 | 54,359 | 15.71 | % | |||||||||
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Interest expense | ||||||||||||
Deposits | 2,678 | 2,509 | 6.74 | % | ||||||||
Federal Home Loan Bank and Federal Reserve borrowings | 758 | 694 | 9.22 | % | ||||||||
Subordinated debentures | 553 | — | NA | |||||||||
Junior subordinated debentures | 179 | 169 | 5.92 | % | ||||||||
Federal funds purchased | 6 | 10 | -40.00 | % | ||||||||
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| 4,174 | 3,382 | 23.42 | % | |||||||||
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Net interest income | 58,726 | 50,977 | 15.20 | % | ||||||||
Provision for loan losses | 3,575 | 1,175 | 204.26 | % | ||||||||
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Net interest income after provision for loan losses | 55,151 | 49,802 | 10.74 | % | ||||||||
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Noninterest income | ||||||||||||
Service charges on deposit accounts | 2,099 | 1,939 | 8.25 | % | ||||||||
Bankcard income | 899 | 687 | 30.86 | % | ||||||||
Bank-owned life insurance income | 463 | 435 | 6.44 | % | ||||||||
Gain on sale of investment securities | 309 | 336 | -8.04 | % | ||||||||
Impairment losses on investment securities (OTTI) | (19 | ) | (13 | ) | 46.15 | % | ||||||
Other noninterest income | 1,726 | 1,234 | 39.87 | % | ||||||||
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| 5,477 | 4,618 | 18.60 | % | |||||||||
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Noninterest expense | ||||||||||||
Salaries and employee benefits | 23,084 | 20,223 | 14.15 | % | ||||||||
Premises and equipment | 3,404 | 3,221 | 5.68 | % | ||||||||
Data processing | 2,682 | 2,343 | 14.47 | % | ||||||||
Legal and professional fees | 2,321 | 1,386 | 67.46 | % | ||||||||
Business development | 1,492 | 1,134 | 31.57 | % | ||||||||
FDIC insurance assessment | 848 | 769 | 10.27 | % | ||||||||
Other real estate (income) expense, net | (32 | ) | 303 | -110.56 | % | |||||||
Merger related expense(1) | 3,745 | 1,836 | 103.98 | % | ||||||||
Other noninterest expense | 3,222 | 2,971 | 8.45 | % | ||||||||
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| 40,766 | 34,186 | 19.25 | % | |||||||||
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Income before provision for income taxes | 19,862 | 20,234 | -1.84 | % | ||||||||
Provision for income taxes | 6,946 | 7,012 | -0.94 | % | ||||||||
|
|
|
| |||||||||
Net income | $ | 12,916 | $ | 13,222 | -2.31 | % | ||||||
|
|
|
| |||||||||
Earnings per share: | ||||||||||||
Basic | $ | 0.65 | $ | 0.69 | -5.80 | % | ||||||
|
|
|
| |||||||||
Diluted | $ | 0.64 | $ | 0.68 | -5.88 | % | ||||||
|
|
|
| |||||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 19,940,709 | 19,133,682 | ||||||||||
Common stock equivalents attributable to stock-based awards | 154,813 | 224,308 | ||||||||||
|
|
|
| |||||||||
Diluted | 20,095,522 | 19,357,990 | ||||||||||
|
|
|
| |||||||||
PERFORMANCE RATIOS | ||||||||||||
Return on average assets | 0.85 | % | 1.01 | % | ||||||||
Return on average equity (book) | 7.55 | % | 8.60 | % | ||||||||
Return on average equity (tangible)(2) | 9.43 | % | 10.62 | % | ||||||||
Net interest margin - fully tax-equivalent yield(3) | 4.25 | % | 4.34 | % | ||||||||
Efficiency ratio(4) | 62.74 | % | 60.62 | % | ||||||||
| (1) | Represents expenses associated with the acquisition of Foundation Bank during 2016 and the acquisition of Capital Pacific Bank, completed 2015. |
| (2) | Tangible equity excludes goodwill and core deposit intangible assets related to acquisitions. |
| (3) | Net interest margin is reported on a tax-equivalent yield basis at a 35% tax rate. |
| (4) | Efficiency ratio is noninterest expense as a percent of net interest income (on a tax-equivalent basis) plus noninterest income. |
PACIFIC CONTINENTAL CORPORATION and subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)
(Unaudited)
| Linked | Year over | |||||||||||||||||||
| September 30, | June 30, | September 30, | Quarter | Year | ||||||||||||||||
| 2016 | 2016 | 2015 | % Change | % Change | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and due from banks | $ | 35,819 | $ | 25,238 | $ | 21,698 | 41.92 | % | 65.08 | % | ||||||||||
Interest-bearing deposits with banks | 71,353 | 18,151 | 11,293 | 293.11 | % | 531.83 | % | |||||||||||||
|
|
|
|
|
| |||||||||||||||
Total cash and cash equivalents | 107,172 | 43,389 | 32,991 | 147.00 | % | 224.85 | % | |||||||||||||
Securities available-for-sale | 482,408 | 396,230 | 387,073 | 21.75 | % | 24.63 | % | |||||||||||||
Loans, net of deferred fees | 1,806,736 | 1,484,152 | 1,355,807 | 21.74 | % | 33.26 | % | |||||||||||||
Allowance for loan losses | (20,531 | ) | (19,127 | ) | (16,612 | ) | 7.34 | % | 23.59 | % | ||||||||||
|
|
|
|
|
| |||||||||||||||
Net Loans | 1,786,205 | 1,465,025 | 1,339,195 | |||||||||||||||||
Interest receivable | 5,957 | 6,334 | 5,688 | -5.95 | % | 4.73 | % | |||||||||||||
Federal Home Loan Bank stock | 4,643 | 8,351 | 6,768 | -44.40 | % | -31.40 | % | |||||||||||||
Property and equipment, net of accumulated depreciation | 19,656 | 19,086 | 17,708 | 2.99 | % | 11.00 | % | |||||||||||||
Goodwill and intangible assets, net | 70,684 | 43,684 | 43,102 | 61.81 | % | 63.99 | % | |||||||||||||
Deferred tax asset | 7,380 | 2,797 | 5,319 | 163.85 | % | 38.75 | % | |||||||||||||
Other real estate owned | 13,066 | 12,108 | 11,854 | 7.91 | % | 10.22 | % | |||||||||||||
Bank-owned life insurance | 34,927 | 23,174 | 22,727 | 50.72 | % | 53.68 | % | |||||||||||||
Other assets | 6,962 | 5,232 | 5,858 | 33.07 | % | 18.85 | % | |||||||||||||
|
|
|
|
|
| |||||||||||||||
Total assets | $ | 2,539,060 | $ | 2,025,410 | $ | 1,878,283 | 25.36 | % | 35.18 | % | ||||||||||
|
|
|
|
|
| |||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
Deposits | ||||||||||||||||||||
Noninterest-bearing demand | $ | 901,290 | $ | 624,146 | $ | 544,009 | 44.40 | % | 65.68 | % | ||||||||||
Savings and interest-bearing checking | 1,082,202 | 826,854 | 831,933 | 30.88 | % | 30.08 | % | |||||||||||||
Core time deposits | 65,860 | 57,019 | 89,605 | 15.51 | % | -26.50 | % | |||||||||||||
|
|
|
|
|
| |||||||||||||||
Total core deposits(2) | 2,049,352 | 1,508,019 | 1,465,547 | 35.90 | % | 39.84 | % | |||||||||||||
Non-core time deposits | 113,281 | 92,113 | 59,407 | 22.98 | % | 90.69 | % | |||||||||||||
|
|
|
|
|
| |||||||||||||||
Total deposits | 2,162,633 | 1,600,132 | 1,524,954 | 35.15 | % | 41.82 | % | |||||||||||||
Securities sold under agreements to repurchase | 1,107 | 1,029 | 302 | 7.58 | % | 266.56 | % | |||||||||||||
Federal funds and overnight funds purchased | — | — | 5,000 | NA | -100.00 | % | ||||||||||||||
Federal Home Loan Bank borrowings | 45,500 | 151,500 | 116,500 | -69.97 | % | -60.94 | % | |||||||||||||
Subordinated debentures | 34,072 | 34,092 | — | -0.06 | % | NA | ||||||||||||||
Junior subordinated debentures | 11,272 | 8,248 | 8,248 | 36.66 | % | 36.66 | % | |||||||||||||
Accrued interest and other payables | 8,005 | 3,983 | 6,603 | 100.98 | % | 21.23 | % | |||||||||||||
|
|
|
|
|
| |||||||||||||||
Total liabilities | 2,262,589 | 1,798,984 | 1,661,607 | 25.77 | % | 36.17 | % | |||||||||||||
|
|
|
|
|
| |||||||||||||||
Shareholders’ equity | ||||||||||||||||||||
Common stock: 50,000,000 shares authorized. Shares issued and outstanding: 22,603,421 at September 30, 2016, 19,731,925 at June 30, 2016 and 19,591,703 at September 30, 2015 | 205,120 | 156,678 | 155,695 | 30.92 | % | 31.74 | % | |||||||||||||
Retained earnings | 66,112 | 63,431 | 56,320 | 4.23 | % | 17.39 | % | |||||||||||||
Accumulated other comprehensive income | 5,239 | 6,317 | 4,661 | -17.07 | % | 12.40 | % | |||||||||||||
|
|
|
|
|
| |||||||||||||||
| 276,471 | 226,426 | 216,676 | 22.10 | % | 27.60 | % | ||||||||||||||
|
|
|
|
|
| |||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,539,060 | $ | 2,025,410 | $ | 1,878,283 | 25.36 | % | 35.18 | % | ||||||||||
|
|
|
|
|
| |||||||||||||||
CAPITAL RATIOS | ||||||||||||||||||||
Total capital (to risk weighted assets) | 12.55 | % | 13.54 | % | 12.58 | % | ||||||||||||||
Tier I capital (to risk weighted assets) | 9.99 | % | 10.52 | % | 11.49 | % | ||||||||||||||
Common equity tier 1 capital (to risk weighted assets) | 9.43 | % | 10.07 | % | 11.00 | % | ||||||||||||||
Tier I capital (to leverage assets) | 10.33 | % | 9.62 | % | 9.88 | % | ||||||||||||||
Tangible common equity (to tangible assets)(1) | 8.34 | % | 9.22 | % | 9.46 | % | ||||||||||||||
Tangible common equity (to risk-weighted assets)(1) | 9.55 | % | 10.30 | % | 11.08 | % | ||||||||||||||
OTHER FINANCIAL DATA | ||||||||||||||||||||
Shares outstanding at end of period | 22,603,421 | 19,731,925 | 19,591,703 | |||||||||||||||||
Tangible shareholders’ equity(1) | $ | 205,787 | $ | 182,742 | $ | 173,574 | ||||||||||||||
Book value per share | $ | 12.23 | $ | 11.48 | $ | 11.06 | ||||||||||||||
Tangible book value per share | $ | 9.10 | $ | 9.26 | $ | 8.86 | ||||||||||||||
| (1) | Tangible common equity excludes goodwill and core deposit intangible assets related to acquisitions. |
| (2) | Core deposits include demand, interest checking, money market, savings, and local time deposits, including local nonpublic time deposits in excess of $100. |
NA Not applicable
PACIFIC CONTINENTAL CORPORATION and subsidiary
Loans by Type
(Dollars in thousands)
(Unaudited)
| Linked | Year over | |||||||||||||||||||
| September 30, | June 30, | September 30, | Quarter | Year | ||||||||||||||||
| 2016 | 2016 | 2015 | % Change | % Change | ||||||||||||||||
LOANS BY TYPE | ||||||||||||||||||||
Real estate secured loans: | ||||||||||||||||||||
Permanent loans: | ||||||||||||||||||||
Multi-family residential | $ | 79,126 | $ | 66,403 | $ | 64,083 | 19.16 | % | 23.47 | % | ||||||||||
Residential 1-4 family | 61,498 | 51,652 | 58,313 | 19.06 | % | 5.46 | % | |||||||||||||
Owner-occupied commercial | 425,879 | 375,911 | 353,255 | 13.29 | % | 20.56 | % | |||||||||||||
Nonowner-occupied commercial | 431,119 | 339,444 | 288,539 | 27.01 | % | 49.41 | % | |||||||||||||
|
|
|
|
|
| |||||||||||||||
Total permanent real estate loans | 997,622 | 833,410 | 764,190 | 19.70 | % | 30.55 | % | |||||||||||||
Construction loans: | ||||||||||||||||||||
Multi-family residential | 24,567 | 16,743 | 9,340 | 46.73 | % | 163.03 | % | |||||||||||||
Residential 1-4 family | 42,130 | 34,372 | 30,834 | 22.57 | % | 36.63 | % | |||||||||||||
Commercial real estate | 78,369 | 57,790 | 39,259 | 35.61 | % | 99.62 | % | |||||||||||||
Commercial bare land and acquisition and development | 19,050 | 10,551 | 16,947 | 80.55 | % | 12.41 | % | |||||||||||||
Residential bare land and acquisition and development | 8,852 | 6,658 | 7,602 | 32.95 | % | 16.44 | % | |||||||||||||
|
|
|
|
|
| |||||||||||||||
Total construction real estate loans | 172,968 | 126,114 | 103,982 | 37.15 | % | 66.34 | % | |||||||||||||
|
|
|
|
|
| |||||||||||||||
Total real estate loans | 1,170,590 | 959,524 | 868,172 | 22.00 | % | 34.83 | % | |||||||||||||
Commercial loans | 630,091 | 518,529 | 479,018 | 21.52 | % | 31.54 | % | |||||||||||||
Consumer loans | 3,201 | 3,313 | 3,575 | -3.38 | % | -10.46 | % | |||||||||||||
Other loans | 4,764 | 4,737 | 6,280 | 0.57 | % | -24.14 | % | |||||||||||||
|
|
|
|
|
| |||||||||||||||
Gross loans | 1,808,646 | 1,486,103 | 1,357,045 | 21.70 | % | 33.28 | % | |||||||||||||
Deferred loan origination fees | (1,910 | ) | (1,951 | ) | (1,238 | ) | -2.10 | % | 54.28 | % | ||||||||||
|
|
|
|
|
| |||||||||||||||
| 1,806,736 | 1,484,152 | 1,355,807 | 21.74 | % | 33.26 | % | ||||||||||||||
Allowance for loan losses | (20,531 | ) | (19,127 | ) | (16,612 | ) | 7.34 | % | 23.59 | % | ||||||||||
|
|
|
|
|
| |||||||||||||||
| $ | 1,786,205 | $ | 1,465,025 | $ | 1,339,195 | 21.92 | % | 33.38 | % | |||||||||||
|
|
|
|
|
| |||||||||||||||
SELECTED MARKET LOAN DATA | ||||||||||||||||||||
Eugene market gross loans, period-end | $ | 404,858 | $ | 396,260 | $ | 368,666 | 2.17 | % | 9.82 | % | ||||||||||
Portland market gross loans, period-end | 728,749 | 697,664 | 647,527 | 4.46 | % | 12.54 | % | |||||||||||||
Seattle market gross loans, period-end | 423,581 | 141,788 | 137,830 | 198.74 | % | 207.32 | % | |||||||||||||
National health care gross loans, period-end(1) | 251,458 | 250,391 | 203,022 | 0.43 | % | 23.86 | % | |||||||||||||
|
|
|
|
|
| |||||||||||||||
Total gross loans, period-end | $ | 1,808,646 | $ | 1,486,103 | $ | 1,357,045 | 21.70 | % | 33.28 | % | ||||||||||
|
|
|
|
|
| |||||||||||||||
DENTAL LOAN DATA(2) | ||||||||||||||||||||
Local dental gross loans, period-end | $ | 150,898 | $ | 152,109 | $ | 155,137 | -0.80 | % | -2.73 | % | ||||||||||
National dental gross loans, period-end | 219,237 | 217,701 | 185,161 | 0.71 | % | 18.40 | % | |||||||||||||
|
|
|
|
|
| |||||||||||||||
Total gross dental loans, period-end | $ | 370,135 | $ | 369,810 | $ | 340,298 | 0.09 | % | 8.77 | % | ||||||||||
|
|
|
|
|
| |||||||||||||||
| (1) | National health care loans include loans to health care professionals, including dental and veterinary practitioners, operating outside of Pacific Continental Bank’s market area. The market area is defined as Oregon and Washington, west of the Cascade Mountain Range. |
| (2) | Dental loans include loans to dental professionals for the purpose of practice expansion, acquisition or other purpose, supported by the cash flows of a dental practice. |
PACIFIC CONTINENTAL CORPORATION and subsidiary
Selected Other Financial Information and Ratios
(Dollars in thousands)
(Unaudited)
| Three months ended | Nine months ended | |||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||
| 2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
BALANCE SHEET AVERAGES | ||||||||||||||||||||
Loans, net of deferred fees | $ | 1,577,365 | $ | 1,463,112 | $ | 1,335,897 | $ | 1,487,349 | $ | 1,235,031 | ||||||||||
Allowance for loan losses | (19,347 | ) | (18,156 | ) | (16,275 | ) | (18,327 | ) | (15,913 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Loans, net of allowance | 1,558,018 | 1,444,956 | 1,319,622 | 1,469,022 | 1,219,118 | |||||||||||||||
Securities, short-term deposits and FHLB stock | 456,871 | 408,378 | 406,579 | 427,937 | 398,978 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Earning assets | 2,014,889 | 1,853,334 | 1,726,201 | 1,896,959 | 1,618,096 | |||||||||||||||
Noninterest-earning assets | 149,098 | 135,651 | 133,217 | 139,968 | 127,521 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Assets | $ | 2,163,987 | $ | 1,988,985 | $ | 1,859,418 | $ | 2,036,927 | $ | 1,745,617 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Interest-bearing core deposits(1) | $ | 960,974 | $ | 921,219 | $ | 944,216 | $ | 957,038 | $ | 869,548 | ||||||||||
Noninterest-bearing core deposits(1) | 687,803 | 637,987 | 538,768 | 647,967 | 495,965 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Core deposits(1) | 1,648,777 | 1,559,206 | 1,482,984 | 1,605,005 | 1,365,513 | |||||||||||||||
Noncore interest-bearing deposits | 107,753 | 68,536 | 62,481 | 80,092 | 72,903 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Deposits | 1,756,530 | 1,627,742 | 1,545,465 | 1,685,097 | 1,438,416 | |||||||||||||||
Borrowings | 161,299 | 130,681 | 93,211 | 116,680 | 95,011 | |||||||||||||||
Other noninterest-bearing liabilities | 6,374 | 6,120 | 7,512 | 6,559 | 6,586 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Liabilities | 1,924,203 | 1,764,543 | 1,646,188 | 1,808,336 | 1,540,013 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Shareholders’ equity (book) | 239,784 | 224,442 | 213,230 | 228,591 | 205,604 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Liabilities and equity | $ | 2,163,987 | $ | 1,988,985 | $ | 1,859,418 | $ | 2,036,927 | $ | 1,745,617 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Shareholders’ equity (tangible)(2) | $ | 190,267 | $ | 180,691 | $ | 170,062 | $ | 182,950 | $ | 166,387 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Period-end earning assets | $ | 2,339,966 | $ | 1,879,406 | $ | 1,725,398 | ||||||||||||||
|
|
|
|
|
| |||||||||||||||
SELECTED MARKET DEPOSIT DATA | ||||||||||||||||||||
Eugene market core deposits, period-end(1) | $ | 785,053 | $ | 712,061 | $ | 747,298 | ||||||||||||||
Portland market core deposits, period-end(1) | 671,747 | 590,880 | 549,113 | |||||||||||||||||
Seattle market core deposits, period-end(1) | 592,552 | 205,078 | 169,136 | |||||||||||||||||
|
|
|
|
|
| |||||||||||||||
Total core deposits, period-end(1) | 2,049,352 | 1,508,019 | 1,465,547 | |||||||||||||||||
Other deposits, period-end | 113,281 | 92,113 | 59,407 | |||||||||||||||||
|
|
|
|
|
| |||||||||||||||
Total | $ | 2,162,633 | $ | 1,600,132 | $ | 1,524,954 | ||||||||||||||
|
|
|
|
|
| |||||||||||||||
Eugene market core deposits, average(1) | $ | 721,271 | $ | 738,435 | $ | 776,755 | ||||||||||||||
Portland market core deposits, average(1) | 631,440 | 624,490 | 537,911 | |||||||||||||||||
Seattle market core deposits, average(1) | 296,066 | 196,281 | 168,318 | |||||||||||||||||
|
|
|
|
|
| |||||||||||||||
Total core deposits, average(1) | 1,648,777 | 1,559,206 | 1,482,984 | |||||||||||||||||
Other deposits, average | 107,753 | 68,536 | 62,481 | |||||||||||||||||
|
|
|
|
|
| |||||||||||||||
Total | $ | 1,756,530 | $ | 1,627,742 | $ | 1,545,465 | ||||||||||||||
|
|
|
|
|
| |||||||||||||||
NET INTEREST MARGIN RECONCILIATION | ||||||||||||||||||||
Yield on average loans(3) | 5.23 | % | 5.07 | % | 5.24 | % | 5.15 | % | 5.31 | % | ||||||||||
Yield on average securities(4) | 2.54 | % | 2.66 | % | 2.52 | % | 2.59 | % | 2.52 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Yield on average earning assets(4) | 4.59 | % | 4.52 | % | 4.59 | % | 4.54 | % | 4.62 | % | ||||||||||
Rate on average interest-bearing core deposits | 0.26 | % | 0.26 | % | 0.25 | % | 0.26 | % | 0.27 | % | ||||||||||
Rate on average interest-bearing non-core deposits | 1.29 | % | 1.19 | % | 1.58 | % | 1.36 | % | 1.43 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Rate on average interest-bearing deposits | 0.37 | % | 0.32 | % | 0.34 | % | 0.34 | % | 0.36 | % | ||||||||||
Rate on average borrowings | 2.23 | % | 1.06 | % | 1.23 | % | 1.71 | % | 1.23 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cost of interest-bearing funds | 0.61 | % | 0.41 | % | 0.41 | % | 0.48 | % | 0.44 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Interest rate spread(4) | 3.98 | % | 4.11 | % | 4.17 | % | 4.06 | % | 4.18 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net interest margin- fully tax equivalent yield(4) | 4.22 | % | 4.27 | % | 4.32 | % | 4.25 | % | 4.34 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Acquired loan fair value accretion impact to net interest margin(5) | 0.16 | % | 0.03 | % | 0.13 | % | 0.11 | % | 0.14 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| (1) | Core deposits include demand, interest checking, money market, savings, and local time deposits, including local nonpublic time deposits in excess of $100 thousand. |
| (2) | Tangible equity excludes goodwill and core deposit intangible assets related to acquisitions. |
| (3) | Interest income includes recognized loan origination fees of $340, $231, and $152 for the three months ended September 30, 2016, June 30, 2016, and September 30, 2015, respectively, and $776 and $478 for the nine months ended September 30, 2016 and 2015, respectively. |
| (4) | Tax-exempt income has been adjusted to a tax-equivalent basis at a 35% tax rate. The tax equivalent yield adjustment to interest earned on loans was $323, $262 and $173 for the three months ended September 30, 2016, June 30, 2016, and September 30, 2015, respectively, and $844 and $415 for the nine months ended September 30, 2016 and 2015, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $260, $256 and $264 for the three months ended September 30, 2016, June 30, 2016, and September 30, 2015, respectively, and $773 and $803 for the nine months ended September 30, 2016 and 2015, respectively. |
| (5) | During the three months ended September 30, 2016, June 30, 2016, and September 30, 2015, accretion of the fair value adjustment on acquired loans contributed to interest income was $877, $156, and $616, respectively, and $1,442 and $1,620 for the nine months ended September 30, 2016 and 2015, respectively. |
PACIFIC CONTINENTAL CORPORATION and subsidiary
Nonperforming Assets, Asset Quality Ratios and Allowance for Loan Losses
(Dollars in thousands)
(Unaudited)
| September 30, | June 30, | September 30, | ||||||||||
| 2016 | 2016 | 2015 | ||||||||||
| NONPERFORMING ASSETS | ||||||||||||
Non-accrual loans | ||||||||||||
Real estate secured loans: | ||||||||||||
Permanent loans: | ||||||||||||
Multi-family residential | $ | — | $ | — | $ | — | ||||||
Residential 1-4 family | 1,465 | 408 | 569 | |||||||||
Owner-occupied commercial | 1,634 | 1,662 | 2,371 | |||||||||
Nonowner-occupied commercial | 3,475 | 727 | 829 | |||||||||
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Total permanent real estate loans | 6,574 | 2,797 | 3,769 | |||||||||
Construction loans: | ||||||||||||
Multi-family residential | — | — | — | |||||||||
Residential 1-4 family | — | — | 53 | |||||||||
Commercial real estate | — | — | — | |||||||||
Commercial bare land and acquisition & development | — | — | — | |||||||||
Residential bare land and acquisition & development | — | — | — | |||||||||
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Total construction real estate loans | — | — | 53 | |||||||||
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Total real estate loans | 6,574 | 2,797 | 3,822 | |||||||||
Commercial loans | 5,619 | 1,501 | 983 | |||||||||
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Total nonaccrual loans | 12,193 | 4,298 | 4,805 | |||||||||
90-days past due and accruing interest | — | — | — | |||||||||
Total nonperforming loans | 12,193 | 4,298 | 4,805 | |||||||||
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Nonperforming loans guaranteed by government | (2,427 | ) | (2,667 | ) | (2,574 | ) | ||||||
Net nonperforming loans | 9,766 | 1,631 | 2,231 | |||||||||
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Other real estate owned | 13,066 | 12,108 | 11,854 | |||||||||
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Total nonperforming assets, net of guaranteed loans | $ | 22,832 | $ | 13,739 | $ | 14,085 | ||||||
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| ASSET QUALITY RATIOS | ||||||||||||
Allowance for loan losses as a percentage of total loans outstanding | 1.14 | % | 1.29 | % | 1.23 | % | ||||||
Allowance for loan losses as a percentage of total nonperforming loans, net of government guarantees | 210.23 | % | 1172.72 | % | 744.60 | % | ||||||
Quarter-to-date net loan (recoveries), charge offs, as a percentage of average loans, annualized | -0.01 | % | 0.12 | % | 0.00 | % | ||||||
Net nonperforming loans as a percentage of total loans | 0.54 | % | 0.11 | % | 0.16 | % | ||||||
Nonperforming assets as a percentage of total assets | 0.90 | % | 0.68 | % | 0.75 | % | ||||||
Consolidated classified asset ratio(1) | 23.80 | % | 20.81 | % | 25.14 | % | ||||||
Past due as a percentage of total loans (2) | 0.01 | % | 0.02 | % | 0.14 | % | ||||||
| Three months ended | Nine months ended | |||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||
| 2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
| ALLOWANCE FOR LOAN LOSSES | ||||||||||||||||||||
Balance at beginning of period | $ | 19,127 | $ | 17,596 | $ | 16,013 | $ | 17,301 | $ | 15,637 | ||||||||||
Provision for loan losses | 1,380 | 1,950 | 625 | 3,575 | 1,175 | |||||||||||||||
Loan charge-offs | (44 | ) | (668 | ) | (105 | ) | (712 | ) | (631 | ) | ||||||||||
Loan recoveries | 68 | 249 | 79 | 367 | 431 | |||||||||||||||
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Net (charge-offs) recoveries | 24 | (419 | ) | (26 | ) | (345 | ) | (200 | ) | |||||||||||
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Balance at end of period | $ | 20,531 | $ | 19,127 | $ | 16,612 | $ | 20,531 | $ | 16,612 | ||||||||||
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| (1) | Consolidated classified asset ratio is defined as the sum of all loan-related contingent liabilities and loans internally graded substandard or worse, impaired loans (net of government guarantees), adversely classified securities, and other real estate owned, divided by total consolidated Tier 1 capital plus the allowance for loan losses. |
| (2) | Defined as loans past due more than 30 days and still accruing interest, as a percentage of total loans, net of deferred fees. |
PACIFIC CONTINENTAL CORPORATION and subsidiary
Consolidated Financial Highlights
(Dollars in thousands, except share and per share data)
(Unaudited)
| 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | ||||||||||||||||
| 2016 | 2016 | 2016 | 2015 | 2015 | ||||||||||||||||
EARNINGS | ||||||||||||||||||||
Net interest income | $ | 20,771 | $ | 19,147 | $ | 18,809 | $ | 18,822 | $ | 18,308 | ||||||||||
Provision for loan loss | $ | 1,380 | $ | 1,950 | $ | 245 | $ | 520 | $ | 625 | ||||||||||
Noninterest income | $ | 1,919 | $ | 1,747 | $ | 1,807 | $ | 2,008 | $ | 1,714 | ||||||||||
Noninterest expense | $ | 13,825 | $ | 14,932 | $ | 12,007 | $ | 11,706 | $ | 11,182 | ||||||||||
Net income | $ | 4,851 | $ | 2,606 | $ | 5,459 | $ | 5,528 | $ | 5,325 | ||||||||||
Basic earnings per share | $ | 0.24 | $ | 0.13 | $ | 0.28 | $ | 0.28 | $ | 0.27 | ||||||||||
Diluted earnings per share | $ | 0.23 | $ | 0.13 | $ | 0.28 | $ | 0.28 | $ | 0.27 | ||||||||||
Average shares outstanding | 20,511,392 | 19,697,314 | 19,607,106 | 19,598,484 | 19,591,666 | |||||||||||||||
Average diluted shares outstanding | 20,676,964 | 19,868,967 | 19,782,282 | 19,766,098 | 19,816,770 | |||||||||||||||
PERFORMANCE RATIOS | ||||||||||||||||||||
Return on average assets | 0.89 | % | 0.53 | % | 1.12 | % | 1.16 | % | 1.14 | % | ||||||||||
Return on average equity (book) | 8.05 | % | 4.67 | % | 9.92 | % | 10.10 | % | 9.91 | % | ||||||||||
Return on average equity (tangible)(1) | 10.14 | % | 5.80 | % | 12.35 | % | 12.60 | % | 12.42 | % | ||||||||||
Net interest margin - fully tax equivalent | 4.22 | % | 4.27 | % | 4.27 | % | 4.35 | % | 4.31 | % | ||||||||||
Efficiency ratio (tax equivalent)(3) | 60.24 | % | 70.60 | % | 57.52 | % | 55.50 | % | 55.12 | % | ||||||||||
Full-time equivalent employees | 366 | 333 | 339 | 322 | 321 | |||||||||||||||
CAPITAL | ||||||||||||||||||||
Tier 1 leverage ratio | 10.33 | % | 9.62 | % | 9.75 | % | 9.93 | % | 9.88 | % | ||||||||||
Common Equity tier 1 ratio | 9.43 | % | 10.07 | % | 10.88 | % | 10.97 | % | 11.00 | % | ||||||||||
Tier 1 risk based ratio | 9.99 | % | 10.52 | % | 11.37 | % | 11.47 | % | 11.49 | % | ||||||||||
Total risk based ratio | 12.55 | % | 13.54 | % | 12.46 | % | 12.58 | % | 12.58 | % | ||||||||||
Book value per share | $ | 12.23 | $ | 11.48 | $ | 11.46 | $ | 11.15 | $ | 11.06 | ||||||||||
Regular cash dividend per share | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.11 | ||||||||||
ASSET QUALITY | ||||||||||||||||||||
Allowance for loan losses (ALL) | $ | 20,531 | $ | 19,127 | $ | 17,596 | $ | 17,301 | $ | 16,612 | ||||||||||
Non performing loans (NPLs) net of government guarantees | $ | 9,766 | $ | 1,631 | $ | 2,642 | $ | 2,719 | $ | 2,231 | ||||||||||
Non performing assets (NPAs) net of government guarantees | $ | 22,832 | $ | 13,739 | $ | 14,389 | $ | 14,466 | $ | 14,085 | ||||||||||
Net loan (recoveries) charge offs | $ | (24 | ) | $ | 419 | $ | (50 | ) | $ | (169 | ) | $ | 26 | |||||||
ALL as a percentage of gross loans | 1.14 | % | 1.29 | % | 1.23 | % | 1.23 | % | 1.23 | % | ||||||||||
ALL as a % NPLs, net of government guarantees | 210.23 | % | 1172.72 | % | 666.01 | % | 636.30 | % | 744.60 | % | ||||||||||
Net loan charge offs (recoveries) to average loans | -0.01 | % | 0.12 | % | -0.01 | % | -0.02 | % | 0.00 | % | ||||||||||
Net NPLs as a percentage of total loans | 0.54 | % | 0.11 | % | 0.18 | % | 0.19 | % | 0.16 | % | ||||||||||
Nonperforming assets as a percentage of total assets | 0.90 | % | 0.68 | % | 0.73 | % | 0.76 | % | 0.75 | % | ||||||||||
Consolidated classified asset ratio(4) | 23.80 | % | 20.81 | % | 20.96 | % | 23.03 | % | 25.14 | % | ||||||||||
Past due as a percentage of total loans (5) | 0.01 | % | 0.02 | % | 0.07 | % | 0.03 | % | 0.14 | % | ||||||||||
END OF PERIOD BALANCES | ||||||||||||||||||||
Total securities and short term deposits | $ | 553,761 | $ | 414,381 | $ | 413,273 | $ | 379,454 | $ | 398,366 | ||||||||||
Total loans net of allowance | $ | 1,786,205 | $ | 1,465,025 | $ | 1,412,138 | $ | 1,387,181 | $ | 1,339,195 | ||||||||||
Total earning assets | $ | 2,344,609 | $ | 1,887,757 | $ | 1,828,922 | $ | 1,771,843 | $ | 1,744,329 | ||||||||||
Total assets | $ | 2,539,060 | $ | 2,025,410 | $ | 1,965,705 | $ | 1,909,478 | $ | 1,878,283 | ||||||||||
Total non-interest bearing deposits | $ | 901,290 | $ | 624,146 | $ | 675,296 | $ | 568,688 | $ | 544,009 | ||||||||||
Core deposits (6) | $ | 2,049,352 | $ | 1,508,019 | $ | 1,633,941 | $ | 1,533,942 | $ | 1,465,547 | ||||||||||
Total deposits | $ | 2,162,633 | $ | 1,600,132 | $ | 1,696,588 | $ | 1,597,093 | $ | 1,524,954 | ||||||||||
AVERAGE BALANCES | ||||||||||||||||||||
Total securities and short term deposits | $ | 456,871 | $ | 408,378 | $ | 417,439 | $ | 401,870 | $ | 406,579 | ||||||||||
Total loans net of allowance | $ | 1,558,018 | $ | 1,444,956 | $ | 1,403,115 | $ | 1,357,461 | $ | 1,319,622 | ||||||||||
Total earning assets | $ | 2,014,889 | $ | 1,853,334 | $ | 1,820,554 | $ | 1,759,331 | $ | 1,725,398 | ||||||||||
Total assets | $ | 2,163,987 | $ | 1,988,985 | $ | 1,956,412 | $ | 1,893,262 | $ | 1,859,418 | ||||||||||
Total non-interest bearing deposits | $ | 687,803 | $ | 637,987 | $ | 617,672 | $ | 584,445 | $ | 538,768 | ||||||||||
Core deposits (6) | $ | 1,648,777 | $ | 1,559,206 | $ | 1,606,548 | $ | 1,526,805 | $ | 1,482,984 | ||||||||||
Total deposits | $ | 1,756,530 | $ | 1,627,742 | $ | 1,670,231 | $ | 1,586,791 | $ | 1,545,465 | ||||||||||
| (1) | Tangible equity excludes goodwill and core deposit intangible assets related to acquisitions. |
| (2) | Net interest margin is reported on a tax-equivalent yield basis at a 35% tax rate. |
| (3) | Efficiency ratio is noninterest expense as a percent of net interest income (on a tax-equivalent basis) plus noninterest income. |
| (4) | The sum of all loan-related contingent liabilities and loans internally graded substandard or worse, impaired loans (net of government guarantees), adversely classified securities, and other real estate owned, divided by total consolidated Tier 1 capital plus the allowance for loan losses. |
| (5) | Defined as loans past due more than 30 days and still accruing interest, as a percentage of total loans, net of deferred fees. |
| (6) | Core deposits include demand, interest checking, money market, savings, and local time deposits, including local nonpublic time deposits in excess of $100 thousand. |