Exhibit 99.1
FOR IMMEDIATE PRESS RELEASE
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| FOR: | | PMC Commercial Trust | | CONTACT: | | Investor Relations |
| | | 17950 Preston Road, Suite 600 | | | | 972-349-3235 |
| | | Dallas, TX 75252 | | | | |
PMC Commercial Trust Announces Third Quarter and Year-To-Date Results
PMC Commercial Trust
AMEX (Symbol PCC)
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| Dallas, TX | | November 9, 2005 |
PMC Commercial Trust (AMEX: PCC) announced third quarter and year-to-date results today. Our income from continuing operations was $1,398,000 ($0.13 per share) during the three months ended September 30, 2005 compared to $2,251,000 ($0.21 per share) during the three months ended September 30, 2004. For the three months ended September 30, 2005, net income was $2,004,000, or $0.19 per share, compared to $3,148,000, or $0.29 per share, for the three months ended September 30, 2004.
Our income from continuing operations was $6,143,000 ($0.56 per share) during the nine months ended September 30, 2005 compared to $6,981,000 ($0.71 per share) during the nine months ended September 30, 2004. For the nine months ended September 30, 2005, net income was $8,353,000, or $0.76 per share, compared to $20,977,000, or $2.12 per share, for the nine months ended September 30, 2004. Our net income for the nine months ended September 30, 2004 included an extraordinary gain resulting from the merger with PMC Capital, Inc. of $11,593,000.
Our income from continuing operations decreased by $853,000 and $838,000, respectively, during the three and nine months ended September 30, 2005 compared to the three and nine months ended September 30, 2004. The primary reason for the decrease in income from continuing operations was impairment losses on certain hotel properties and a provision for loss on rent and related receivables of $1,083,000 and $1,897,000 during the three and nine months ended September 30, 2005, respectively.
Our income from discontinued operations was $606,000 ($0.06 per share) during the three months ended September 30, 2005 compared to $897,000 ($0.08 per share) during the three months ended September 30, 2004 and $2,210,000 ($0.20 per share) during the nine months ended September 30, 2005 compared to $2,403,000 ($0.24 per share) during the nine months ended September 30, 2004.
Our discontinued operations included gains from sales of real estate of $1,038,000 and $2,152,000 during the three and nine months ended September 30, 2005, respectively, compared to losses during the three and nine months ended September 30, 2004 of $354,000 and $136,000, respectively. The gains during the nine months ended September 30, 2005 were from the sale of five hotel properties and four assets acquired in liquidation for approximately $16.7 million. Offsetting these gains from sales of real estate were the net earnings (loss) from hotel operations. During the three and nine months ended September 30, 2005 we had a net loss from hotel operations included in discontinued operations of $297,000 and net earnings of $1,233,000, respectively, compared to net earnings from hotel operations of $1,277,000 and $2,565,000, respectively, during the three and nine months ended September 30, 2004. The primary cause of the reductions in net earnings was (a) a reduction in rent charged to our tenant commencing October 1, 2004, (b) fewer properties due to the sale of hotel properties, and (c) accrued but unpaid real estate taxes incurred by our tenant during 2005.
The tenant of our owned hotel properties filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code (“Chapter 11”) on June 22, 2005. Arlington Hospitality, Inc. (their parent company and the guarantor of the obligations under the lease) filed for bankruptcy protection under Chapter 11 on August 31, 2005. As a result, we performed an analysis of our anticipated future distribution to determine the collectibility of our rent and related receivables based on best available information provided to us through the bankruptcy proceedings and determined that an allowance of approximately $1.1 million was necessary on these assets as of September 30, 2005.
In addition, we performed a recoverability test for our hotel properties and determined that some of our hotel properties are deemed impaired. The aggregate impairment charge was approximately $2.0 million which was recorded during the nine months ended September 30, 2005.
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| PMC COMMERCIAL TRUST — Page 2 | | Earnings Press Release | | November 9, 2005 |
Dr. Andrew S. Rosemore, Chairman of the Board of Trust Managers stated, “The Arlington bankruptcies have been problematic with a resultant reduction to our net income. However, we are well on our way to resolving these issues with a substantive sale of the Amerihost hotels. We have sold 17 properties since 2000 and have 13 properties remaining. It is our intention to sell nine of the remaining properties over the next 12 months. The other four properties have loans with significant prepayment penalties that will in all likelihood delay their sale although we intend to seek lease opportunities. While there can be no assurance of the net proceeds that we will receive from selling our properties, we believe that the net proceeds on an aggregate basis will be approximately $29.5 million compared to our net book value at September 30, 2005 of approximately $25.9 million. We anticipate that Arlington will reject the leases on these 13 properties soon which will allow us to proceed with an unencumbered sales process.
In reviewing our year-to-date performance, I am pleased to note that our core lending business has improved significantly with operating income of $8,953,000 compared to $7,414,000 for the nine months of 2005 and 2004, respectively. During this period our level of fundings decreased to $30.3 million (compared to $38.9 million) as a result of many factors but it is important to note that there has been a gradual increase in our commitments for future fundings to $53.3 million. Hopefully, this pipeline will provide a foundation for an increase in our core business for 2006. As always, we are committed to funding new loans that will allow us to maintain our consistent 26-year history of loan quality.
As a result of the uncertainties relating to our hotel properties and the related receivables, the Board of Trust Managers reduced the dividend for the July and October payout to $0.30 per share. While there can be no assurance that other significant events might cause a further reduction, it is anticipated that the year-end dividend (scheduled to be paid in January 2006), will also be $0.30 per share.
Once again, I appreciate our investors’ patience as we proceed expeditiously to refocus our company with its core business that has been so rewarding to our long-term shareholders.”
Financial Position and Results of Operations
The following tables contain comparative selected financial data as of September 30, 2005 and December 31, 2004 and for the three and nine months ended September 30, 2005 and 2004:
Financial Position Information:
(Dollars in thousands)
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| | | September 30, | | | December 31, | | | Increase | |
| | | 2005 | | | 2004 | | | (Decrease) % | |
| Loans receivable, net | | $ | 139,652 | | | $ | 128,234 | | | | 9 | % |
| Retained interests in transferred assets | | $ | 63,487 | | | $ | 70,523 | | | | (10 | )% |
| Real estate investments, net | | $ | 25,913 | | | $ | 38,082 | | | | (32 | )% |
| Total assets | | $ | 246,191 | | | $ | 253,840 | | | | (3 | )% |
| Notes and debentures payable | | $ | 35,403 | | | $ | 60,749 | | | | (42 | )% |
| Junior subordinated notes | | $ | 27,070 | | | $ | — | | | | — | |
| Credit facilities | | $ | 9,605 | | | $ | 14,600 | | | | (34 | )% |
| Total beneficiaries’ equity | | $ | 158,314 | | | $ | 161,304 | | | | (2 | )% |
| Shares outstanding | | | 10,874,221 | | | | 10,876,961 | | | | — | |
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