PENNSYLVANIA
COMMERCE BANCORP
[GRAPHIC OMITTED]
CONTACTS
--------
Gary L. Nalbandian Mark A. Zody
Chairman/President Chief Financial Officer
(717) 975-5630
PENNSYLVANIA COMMERCE BANCORP EARNINGS UP 17%
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DEPOSITS INCREASE 21%
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April 20, 2004- Camp Hill, PA - Pennsylvania Commerce Bancorp, Inc.
(NASDAQ Small Cap Market Symbol: COBH) parent company of Commerce
Bank/Harrisburg reported record earnings and increased deposits, assets and
loans for the first quarter of 2004, it was announced today by Gary L.
Nalbandian, Chairman of the bank holding company.
===============================================================================================================
MARCH 31, 2004
FIRST QUARTER FINANCIAL HIGHLIGHTS
%
Increase(1)
---------------
* Total Assets: $1.10 Billion 31%
* Total Deposits: $ 937 Million 21%
* Total Loans (net): $ 507 Million 34%
* Total Revenues: $13.6 Million 38%
* Net Income: $ 1.9 Million 17%
* Diluted Net Income Per Share: $ 0.76 12%
(1) Compared to March 31, 2003 First Quarter Financial Highlights
===============================================================================================================
In commenting on the Company's financial results, Chairman Nalbandian
said, "Our strong core deposit growth of 25% and exceptional loan growth of 34%
produced strong top line revenues of $13.6 million for the first quarter, up 38%
over the first quarter of 2003."
Some of our financial highlights were:
>> Total revenues increased $3.8 million, or 38%, for the first
quarter of 2004 over the same period in 2003.
>> Net income increased 17% over the first quarter one year ago.
>> Earnings per share rose 12% for the first quarter.
>> Core deposits grew $179 million, or 25%, over the previous
12-month period.
>> Comparable store core deposits grew 19%.
>> Total loans grew $130 million, or 34%, over the first quarter
one year ago.
>> Net interest margin increased to 4.42%, up 22 basis points
from the previous quarter and up 27 basis points over the
first quarter of 2003.
>> The Company's total deposit cost of funds including
non-interest-bearing demand deposits was .92% for the first
quarter of 2004 compared to 1.56% for the first quarter of
2003.
Three Months Ended
March 31
---------------------------------------------------
%
2004 2003 Increase
---------------------------------------------------
(dollars in thousands, except per share data)
Total Revenues: $13,554 $9,795 38%
Total Expenses: 10,117 7,028 44%
Net Income: 1,928 1,648 17%
Diluted Net Income
Per Share: $0.76 $0.68 12%
2
Balance Sheet Comparision
3/31/04 3/31/03 % Change
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(dollars in thousands)
Total Assets: $1,097,226 $ 835,099 31%
Total Loans (net): 507,156 377,631 34%
Total Deposits: 937,217 774,359 21%
Core Deposits: 888,832 710,166 25%
Shareholder Returns
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Commerce S & P Index
-------- ------------
1 year 44.83% 34.99%
5 years 18.01 -1.20
10 years 23.67 11.67
Total Deposits
--------------
The Company's strong growth continues with total deposits at March 31,
2004 reaching $937 million, a $163 million, or 21%, increase over total deposits
of $774 million one year ago.
3/31/04 3/31/03 $ Increase % Change
-------- ------- ---------- ---------
(dollars in thousands)
Core Deposits: $ 888,832 $ 710,166 $178,666 25%
Total Deposits: 937,217 774,359 162,858 21%
Core Deposits
-------------
Core deposit growth by type of account is as follows:
1st Quarter Annual
3/31/04 3/31/03 Cost of Funds Growth %
------- ------- ------------- --------
(dollars in thousands)
Demand $ 174,989 $ 140,979 0.00% 24%
Interest Bearing Demand 293,377 209,732 0.84 40
Savings 260,700 226,933 0.89 15
Time 159,766 132,522 2.43 21
Total Core Deposits $ 888,832 $ 710,166 0.82% 25%
3
The Company's total deposit cost of funds including
non-interest-bearing demand deposits was .92% for the first quarter of 2004
compared to 1.56% for the first quarter of 2003. Total cost of all funding
sources was 1.18% for the first quarter of 2004 compared to 1.75% for the same
period in 2003.
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 March 31, 2004, 15 of Commerce's 23 branches have been open for two
years or more.
Net Income and Earnings Per Share
---------------------------------
Net income totaled $1.9 million for the first quarter of 2004, up
$280,000, a 17% increase over net income of $1.6 million as reported for the
first quarter of 2003.
Net income per share on a fully diluted basis for the first quarter was
$.76, a 12% increase over the $.68 recorded for the same period a year ago.
Three Months Ended
March 31
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%
2004 2003 Increase
--------------------------------------------------
(dollars in thousands, except per share data)
Net Income: $ 1,928 $ 1,648 17%
Diluted Net Income
Per Share: $ .76 $ .68 12%
Total Revenues
--------------
Three Months Ended
March 31,
----------------------------------------------
%
2004 2003 Increase
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(dollars in thousands)
Total Revenues: $13,554 $9,795 38%
Total revenues (net interest income plus non-interest income) increased
$3.8 million to $13.6 million, a 38% increase over the first quarter of 2003.
Total revenues for the first quarter of 2004 resulted from a 44%
increase in net interest income and an 18% increase in non-interest income.
4
Net Interest Income and Net Interest Margin
--------------------------------------------
Net interest income for the first quarter of $11.0 million represented
a 44% increase over the $7.6 million recorded a year ago. 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 first quarter of 2004 was 4.42%
compared to 4.15% for the first quarter 2003. The increase in net interest
margin was primarily due to a decrease in the Company's cost of deposit funds to
..92% during the first quarter of 2004 versus 1.56% for the same period in 2003.
Non-Interest Income
-------------------
Non-interest income for the first quarter of 2004 increased to $2.6
million from $2.2 million a year ago, an 18% increase.
The growth in non-interest income for the first quarter was reflected
in increased deposit charges and service fees as more fully depicted below:
Three Months Ended
March 31
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%
2004 2003 Increase
-------------------------------------------------
(dollars in thousands)
Deposit Charges
& Service Fees: $ 2,241 $1,804 24%
Other Operating Income 345 387 (11)
-------------------------------------------------
$ 2,586 $2,191 18%
Non- Interest Expenses
----------------------
Non-interest expenses for the first quarter of 2004 were $10.1 million,
up 44% from $7.0 million a year ago. The increase in non-interest expenses for
the first quarter is primarily a result of the Company's rapid growth during the
last 12 months and also reflects 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
December 2003, two of these representing the Company's initial entry into the
Berks County market. Also, as of March 31, 2004, eight of the Company's 23
branch offices were constructed within the past 2 years. 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.
5
Lending
-------
Loans increased $130 million, or 34%, to $507 million from $377 million
a year ago, reflecting a strong and continuing commitment to the credit needs of
Commerce's market areas. This growth was represented across all loan categories
as shown in the table on the next page. Consumer loan growth of 89% 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
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3/31/04 % of Total 3/31/03 % of Total $ Increase % Increase
----------------- -------------- -------------- ------------- --------------- -----------
(dollars in thousands)
Commercial $ 123,137 24 % $ 90,541 24 % $ 32,596 36%
Consumer 76,310 15 40,437 11 35,873 89
Commercial Real Estate 236,918 46 181,179 47 55,739 31
Residential 77,310 15 70,908 18 6,402 9
----------------- -------------- -------------- ------------- --------------- -----------
Gross Loans $ 513,675 100 % $383,065 100 % $ 130,610
Less: Reserves (6,519) (5,434) (1,085)
----------------- -------------- ---------------
Net Loans $ 507,156 $ 377,631 $ 129,525 34%
Asset Quality
-------------
Asset quality continues to be strong as non-performing assets and loans
90 days past due at March 31, 2004 totaled $1.6 million, or .15%, of total
assets, versus $1.0 million, or .14%, of total assets one year ago. Net
charge-offs as a percentage of average loans outstanding for the first quarter
of 2004 were .01%, the same as for the first three months of last year.
The Company's asset quality results are highlighted below:
Three Months Ended
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3/31/2004 3/31/2003
--------- ---------
Non-Performing Assets/Assets 0.15% 0.14%
Net Loan Charge-Offs 0.01% 0.01%
Loan Loss Reserve/Gross Loans 1.27% 1.42%
Non-Performing Loan Coverage 448% 615%
Non-Performing Assets/Capital
and Reserves 2% 4%
6
Investments
------------
The Company's investment portfolio increased by 37%, to $504 million
from $367 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 5.17% and a
current duration of 3.9 years as of March 31, 2004.
The appreciation in the available for sale portfolio totaled
approximately $3.5 million at March 31, 2004.
Capital
-------
Stockholders' equity at March 31, 2004 totaled $54 million, an increase
of 21%, over stockholders' equity of $44 million at March 31, 2003. Return on
average stockholders' equity ("ROE") for the first quarter of 2004 was 14.87% as
compared to 15.20% for the first quarter of 2003.
The Company's capital ratios at March 31, 2004 were as follows:
Regulatory Guidelines
Commerce "Well Capitalized"
-------- ----------------------
Leverage Ratio 6.06% 5.00%
Tier 1 9.42 6.00
Total Capital 10.38 10.00
Retail Activities
-----------------
>> "Same store core deposit growth" at March 31, 2004 was 19%
compared to the same period one year ago.
>> Commerce Bank continues its leading role in on-line banking
with its penetration rate of 38%, 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.
7
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.
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