PENNSYLVANIA COMMERCE BANCORP [LOGO]
CONTACTS
--------
Gary L. Nalbandian Mark A. Zody
Chairman/President Chief Financial Officer
(717) 975-5630
PENNSYLVANIA COMMERCE BANCORP REPORTS RECORD EARNINGS
-----------------------------------------------------
ASSETS EXCEED $1 BILLION
------------------------
January 27, 2004- Camp Hill, PA - Pennsylvania Commerce Bancorp, Inc.
(NASDAQ Small Cap Market Symbol: COBH) parent company of Commerce
Bank/Harrisburg reported increased deposits, assets and loans for the fourth
quarter and the year ended December 31, 2003, it was announced today by Gary L.
Nalbandian, Chairman of the bank holding company.
================================================================================
DECEMBER 31, 2003
FOURTH QUARTER FINANCIAL HIGHLIGHTS
-----------------------------------
%
Increase(1)
-------------
* Total Assets: $ 1.05 Billion 34%
* Total Deposits: $ 907 Million 25%
* Total Loans (net): $ 470 Million 29%
* Total Revenues: $ 12.9 Million 34%
* Net Income: $ 1.7 Million 10%
* Diluted Net Income Per Share: $ 0.72 4%
(1) Compared to December 31, 2002 Fourth Quarter Financial Highlights
================================================================================
1
Three Months Ended Year Ended
December 31 December 31
---------------------------------------------------------------------------------------
% %
2003 2002 Increase 2003 2002 Increase
---------------------------------------------------------------------------------------
(dollars in thousands, except per share data)
Total Revenues: $12,875 $ 9,629 34% $43,880 $35,408 24%
Total Expenses: 9,842 6,916 42% 32,510 25,429 28%
Net Income: 1,725 1,570 10% 6,557 5,674 16%
Diluted Net Income
Per Share: $ 0.72 $ 0.69 4% $ 2.81 $ 2.48 13%
Balance Sheet Comparision
-------------------------
12/31/03 12/31/02 % Change
------------------------------------------------
(dollars in thousands, except per share data)
Total Assets: $1,052,246 $ 786,598 34%
Total Loans (net): 469,937 363,735 29%
Total Deposits: 906,527 726,955 25%
Core Deposits: 857,978 687,145 25%
In commenting on the Company's financial results, Chairman Nalbandian said,
"Our strong deposit growth of 25% and exceptional loan growth of 29% have
propelled us to exceed $1 billion in total assets in only our 18th year of
operation. Our combination of strong deposit growth and a low cost of funds
provide us with increased profitability while continuing to make substantial
investments in new locations, technology and personnel."
2
Some of our financial highlights were:
> The Company opened two new stores in Dauphin County during the fourth
quarter, completing our commitment to open a total of five new offices
in 2003.
> Total revenues grew 34% for the fourth quarter and 24% for 2003.
> Net income increased 10% for the fourth quarter and 16% for 2003.
> Earnings per share rose 4% for the fourth quarter and 13% for 2003.
> Core deposits grew $171 million, or 25%, for the year.
> Comparable store core deposits grew 18%.
> Total loans grew $106 million, or 29%, for the year.
> Net interest margin increased to 4.20%, up thirteen basis points from
the previous quarter.
Shareholder Returns
- -------------------
Commerce S & P Index
-------- -----------
1 year 42.91% 28.67%
5 years 17.95 -.57
10 years 24.16 11.05
Total Deposits
- --------------
The Company's strong growth continues with total deposits at December 31,
2003 reaching $907 million, a $180 million, or 25%, increase over total deposits
of $727 million one year ago.
12/31/03 12/31/02 $ Increase % Change
-------- -------- ---------- --------
Core Deposits: $857,978 $687,145 $170,833 25%
Total Deposits: 906,527 726,955 179,572 25%
The Company considers core deposits as all deposits other than public
certificates of deposit and measures comparable store deposit growth as the
annual percentage increase in core deposits for branch offices open two years or
more. As of December 31, 2003, 15 of Commerce's 23 branches have been open for
two years or more.
3
The Company's total deposit cost of funds including non-interest-bearing
demand deposits was 0.99% for the fourth quarter of 2003 compared to 1.75% for
the fourth quarter of 2002. Total cost of all funding sources was 1.22% for the
fourth quarter of 2003 compared to 1.94% for the same period in 2002.
Net Income and Earnings Per Share
- ---------------------------------
Net income totaled $1.73 million for the fourth quarter of 2003, up
$155,000, a 10% increase over net income of $1.57 million as reported for the
fourth quarter of 2002.
Net income per share on a fully diluted basis for the fourth quarter was
$0.72, a 4% increase over the $0.69 recorded for the same period a year ago.
Three Months Ended Year Ended
December 31 December 31
-----------------------------------------------------------------------------------
% %
2003 2002 Increase 2003 2002 Increase
-----------------------------------------------------------------------------------
(dollars in thousands, except per share data)
Net Income: $ 1,725 $ 1,570 10% $ 6,557 $ 5,674 16%
Diluted Net Income
Per Share: $ 0.72 $ 0.69 4% $ 2.81 $ 2.48 13%
For the year 2003, net income totaled $6.56 million, up $883,000, or 16%,
over net income of $5.67 million for the year 2002.
Net income per fully diluted share was $2.81 for the year 2003 compared to
$2.48 for the same period of 2002, an increase of 13%.
Total Revenues
- --------------
Three Months Ended Year Ended
December 31 December 31
------------------------------------------------------------------------------------------
% %
2003 2002 Increase 2003 2002 Increase
------------------------------------------------------------------------------------------
(dollars in thousands)
Total Revenues: $12,875 $ 9,629 34% $43,880 $35,408 24%
Total revenues (net interest income plus non-interest income) increased
$3.2 million to $12.9 million, a 34% increase over the fourth quarter of 2002.
The growth in total revenue for the fourth quarter of 2003 resulted from a 33%
increase in net interest income and increased non-interest income of 37%.
4
Total revenues for the year 2003 increased by $8.5 million, or 24%, over
the year 2002. This increase was the result of a 22% increase in net interest
income and a 30% increase in non-interest income.
Net Interest Income and Net Interest Margin
- -------------------------------------------
Net interest income for the fourth quarter of $9.9 million represented a
33% increase over the $7.5 million recorded a year ago. For the year 2003 net
interest income totaled $33.9 million, up $6.2 million, or 22%, over $27.7
million for 2002. The Company's strong, low-cost core deposit growth fueled
volume increases in the level of interest earning assets, which resulted in the
increase in interest income.
The net interest margin for the fourth quarter of 2003 was 4.20% compared
to 4.14% for the fourth quarter 2002. The increase is primarily due to a
decrease in the Company's cost of deposit funds to 1.22% during the fourth
quarter of 2003 versus 1.94% for the same period in 2002.
Non-Interest Income
- -------------------
Non-interest income for the fourth quarter of 2003 increased to $2.9
million from $2.1 million a year ago, a 37% increase.
Non-interest income for the year 2003 increased to $10.0 million from $7.7
million in 2002, a 30% increase.
The growth in non-interest income for the fourth quarter and the year 2003
was reflected in increased deposit charges and service fees and other operating
income which are more fully depicted below:
Three Months Ended Year Ended
December 31 December 31
--------------------------------------------------------------------------------
% %
2003 2002 Increase 2003 2002 Increase
--------------------------------------------------------------------------------
(dollars in thousands)
Deposit Charges $2,159 $1,891 14% $7,968 $6,766 18%
& Service Fees:
Other Operating Income 183 251 (27)% 1,142 941 21%
--------------------------------------------------------------------------------
Subtotal 2,342 2,142 9% 9,110 7,707 18%
Net Investment Securities
Gains 592 - - 880 - -
--------------------------------------------------------------------------------
Total Non-Interest Income $2,934 $2,142 37% $9,990 $7,707 30%
5
Non- Interest Expenses
- ----------------------
Non-interest expenses for the fourth quarter of 2003 were $9.8 million, up
42% from $6.9 million a year ago. Non-interest expenses for the year 2003 were
$32.5 million, up 28% from $25.4 million for the year 2002. The increase in
non-interest expenses for the fourth quarter and the year 2003 are primarily a
result of the Company's rapid growth during the last 2 years and also reflect
substantial infrastructure expenditures made by the Company to support future
growth. The Company opened 5 new branch offices between mid-June and the end of
the year, two of these representing the Company's initial entry into the Berks
County market. Also, as of December 31, 2003, eight of the Company's 23 branch
offices were constructed within the past 2 years and six of these have been
within the past 13 months. As a result of this rapid expansion and planned
future growth, the Company has incurred increased expenses to construct the new
branch offices and hire the appropriate personnel at all levels which allows us
to continue to provide our high level of customer service and convenience.
Lending
- -------
Loans increased $106.2 million, or 29%, to $469.9 million from $363.7
million a year ago, reflecting a continuing commitment to the credit needs of
Commerce's market areas. This growth was represented across all loan categories
as shown in the table below. Consumer loan growth of 105% has been extremely
strong over the past 12 months and is directly related to the Company's increase
in branch locations and added consumer lending personnel.
The composition of the Company's loan portfolio is as follows:
Loan Composition
----------------
12/31/03 % of Total 12/31/02 % of Total $ Increase % Increase
-------- ---------- -------- ---------- ---------- ----------
(dollars in thousands)
Commercial $105,164 22 % $ 86,507 24 % $ 18,657 22 %
Consumer 71,007 15 34,598 9 36,409 105
Commercial Real Estate 222,913 47 176,487 48 46,426 26
Residential 76,860 16 71,289 19 5,571 8
-------- -------- -------- -------- -------- --------
Gross Loans $475,944 100 % $368,881 100 % $107,063
Less: Reserves (6,007) (5,146) (861)
-------- -------- --------
Net Loans $469,937 $363,735 $106,202 29 %
6
Asset Quality
- -------------
Asset quality continues to be strong as non-performing assets at December
31, 2003 totaled $1.4 million, or 0.13%, of total assets, versus $1.8 million,
or 0.23%, of total assets one year ago. Net charge-offs as a percentage of
average loans outstanding for the year 2003 were 0.20% as compared to 0.23% for
2002.
The Company's asset quality results are highlighted below:
Year Ended
----------
12/31/2003 12/31/2002
---------- ----------
Non-Performing Assets/Assets 0.13% 0.23%
Net Loan Charge-Offs 0.20% 0.23%
Loan Loss Reserve/Gross Loans 1.26% 1.40%
Non-Performing Loan Coverage 513% 311%
Non-Performing Assets/Capital
and Reserves 2% 3%
Investments
- -----------
The Company's investment portfolio increased by 60%, to $484 million from
$303 million one year ago.
The portfolio, consisting mainly of high quality U.S. Government agency and
mortgage-backed obligations, has a weighted average yield of 5.16% and a current
duration of 4.8 years as of December 31, 2003.
The appreciation in the available for sale portfolio totaled approximately
$1.7 million at December 31, 2003.
Capital
- -------
Stockholder's equity at December 31, 2003 totaled $50 million, an increase
of 17%, over stockholder's equity of $42.8 million at December 31, 2002. Return
on average stockholders equity ("ROE") for the year 2003 was 14.21% as compared
to 14.86% for 2002.
The Company's capital ratios at December 31, 2003 were as follows:
Regulatory Guidelines
Commerce "Well Capitalized"
-------- ------------------
Leverage Ratio 6.19% 5.00%
Tier 1 9.57 6.00
Total Capital 10.49 10.00
7
Retail Activities
- -----------------
> In December, the Company opened its 22nd and 23rd branch offices,
located in Dauphin County, completing our commitment to open 5 new
offices in 2003. During the last three years, the Company has opened
10 of its 23 branch offices.
> "Same store core deposit growth" at December 31, 2003 was 18% compared
to the same period one year ago.
> Commerce Bank continues its leading role in on-line banking with its
penetration rate of 33%, which is one of the highest in America.
> Commerce serves customers in Cumberland, Dauphin, Lebanon, York, and
Berks counties.
> Commerce Bank/Harrisburg is also a member of "the Commerce Bank
Network" led by Commerce Bancorp (NYSE: CBH) in Cherry Hill, N.J.
8
FORWARD-LOOKING STATEMENTS
The Company may from time to time make written or oral "forward-looking
statements," including statements contained in the Company's filings with the
Securities and Exchange Commission, in its reports to stockholders and in other
communications by the Company, which are made in good faith by the Company
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995.
These forward-looking statements include statements with respect to the
Company's beliefs, plans, objectives, goals, expectations, anticipations,
estimates and intentions, that are subject to significant risks and
uncertainties and are subject to change based on various factors (some of which
are beyond the Company's control). The words "may", "could", "should", "would",
"believe", "anticipate", "estimate", "expect", "intend", "plan" and similar
expressions are intended to identify forward-looking statements. The following
factors, among others, could cause the Company's financial performance to differ
materially from that expressed in such forward-looking statements: the strength
of the United States economy in general and the strength of the local economies
in which the Company conducts operations; the effects of, and changes in, trade,
monetary and fiscal policies, including interest rate policies of the Board of
Governors of the Federal Reserve System (the "FRB"); inflation; interest rate,
market and monetary fluctuations; the timely development of competitive new
products and services by the Company and the acceptance of such products and
services by customers; the willingness of customers to substitute competitors'
products and services for the Company's products and services and vice versa;
the impact of changes in financial services' laws and regulations (including
laws concerning taxes, banking, securities and insurance); technological
changes; future acquisitions; the expense savings and revenue enhancements from
acquisitions being less than expected; the growth and profitability of the
Company's noninterest or fee income being less than expected; unanticipated
regulatory or judicial proceedings; changes in consumer spending and saving
habits; and the success of the Company at managing the risks involved in the
foregoing.
The Company cautions that the foregoing list of important factors is not
exclusive. The Company does not undertake to update any forward-looking
statements, whether written or oral, that may be made from time to time by or on
behalf of the Company.
9