[PA COMMERCE LOGO OMITTED]
CONTACTS
--------
Gary L. Nalbandian Mark A. Zody
Chairman/President Chief Financial Officer
(717) 975-5630
PENNSYLVANIA COMMERCE BANCORP EARNINGS UP 32%
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DEPOSITS INCREASE 25%
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July 22, 2004- Camp Hill, PA - Pennsylvania Commerce Bancorp, Inc.
(NASDAQ Small Cap Market Symbol: COBH) parent company of Commerce
Bank/Harrisburg, N.A. reported record earnings and increased deposits, assets
and loans for the second quarter of 2004, it was announced today by Gary L.
Nalbandian, Chairman of the bank holding company.
JUNE 30, 2004
SECOND QUARTER FINANCIAL HIGHLIGHTS
-----------------------------------
%
Increase(1)
---------------
* Total Assets: $1.18 Billion 40%
* Total Deposits: $ 978 Million 25%
* Total Loans (net): $ 588 Million 47%
* Total Revenues: $14.4 Million 38%
* Net Income: $ 2.2 Million 32%
* Diluted Net Income Per Share: $0.86 26%
(1)- Compared to June 30, 2003 Second Quarter Financial Highlights
In commenting on the Company's financial results, Company Chairman
Nalbandian said, "Our strong core deposit growth of 26% and loan growth of 47%
produced strong top line revenues of $14.4 million for the second quarter, up
38% over the second quarter of 2003."
Some of our financial highlights were:
>> Total revenues increased $3.9 million, or 38%, for the second quarter
of 2004 over the same period in 2003.
>> Net income increased 32% over the second quarter of 2003.
>> Earnings per share rose 26% for the second quarter to $0.86.
>> Core deposits grew $190 million, or 26%, over the prior 12-month
period.
>> Comparable store core deposits grew 19% over second quarter 2003.
>> Total loans grew $187 million, or 47%, for the prior 12 months
including $81.4 million in growth during the second quarter of 2004 and
$118.5 million for the first six months of 2004.
>> Net interest margin was 4.35% for the second quarter of 2004, up 6
basis points over the second quarter of 2003.
>> The Company's total deposit cost of funds including
non-interest-bearing demand deposits was 0.91% for the second quarter
of 2004 compared to 1.36% for the second quarter of 2003.
Income Statement
- ----------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------------ ------------------------------------------
% %
2004 2003 Increase 2004 2003 Increase
------------------------------------------ ------------------------------------------
(dollars in thousands, except per share data) (dollars in thousands, except per share data)
Total Revenues: $ 14,357 $10,411 38% $27,911 $20,206 38%
Total Expenses: 10,449 7,427 41% 20,566 14,455 42%
Net Income: 2,181 1,658 32% 4,109 3,306 24%
Diluted Net Income
Per Share: $ 0.86 $ 0.68 26% $ 1.62 $ 1.36 19%
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Balance Sheet
- -------------
06/30/04 06/30/03 % Change
--------------------------------------------------------------
(dollars in thousands)
Total Assets: $1,184,870 $ 845,297 40%
Total Loans (net): 588,398 401,073 47%
Core Deposits: 921,843 731,485 26%
Total Deposits: 978,258 782,733 25%
Shareholder Returns
- -------------------
(as of June 30, 2004)
Commerce S & P Index
-------- -----------
1 year +31% 19%
5 years +17% -2%
10 years +24% 12%
Total Deposits
- --------------
The Company's strong growth continues with total deposits at June 30,
2004 reaching $978 million, a $195 million, or 25%, increase over total deposits
of $783 million at June 30, 2003.
6/30/04 6/30/03 $ Increase % Change
------- ------- ---------- --------
(dollars in thousands)
Core Deposits: $ 921,843 $ 731,485 $190,358 26%
Total Deposits: 978,258 782,733 195,525 25%
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Core Deposits
- -------------
Core deposit growth by type of account is as follows:
2nd Quarter Annual
6/30/04 6/30/03 Cost of Funds Growth %
------- ------- ------------- --------
(dollars in thousands)
Demand $ 180,783 $ 154,580 0.00% 17%
Interest Bearing Demand 303,859 215,096 0.90 41
Savings 266,512 232,175 0.90 15
Time 170,689 129,634 2.36 32
------------- --------------- -------------------- ------------
Total Core Deposits $ 921,843 $ 731,485 0.84% 26%
The Company's deposit cost of funds including non-interest-bearing
demand deposits was 0.91% for the second quarter of 2004 compared to 1.36% for
the second quarter of 2003. Total cost of all funding sources was 1.19% for the
second quarter of 2004 compared to 1.54% for the second quarter of 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 June 30, 2004, 16 of Commerce's 23 branches have been open for two
years or more.
Net Income and Earnings Per Share
- ---------------------------------
Net income totaled $2.2 million for the second quarter of 2004, up
$523,000, a 32% increase over net income of $1.7 million as reported for the
second quarter of 2003.
Net income per share on a fully diluted basis for the second quarter
was $.86, a 26% increase over the $.68 recorded for the same period a year ago.
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------------------- ------------------------------------------------
% %
2004 2003 Increase 2004 2003 Increase
-------------------------------------------------- ------------------------------------------------
(dollars in thousands, except per share data) (dollars in thousands, except per share data)
Net Income: $ 2,181 $1,658 32% $ 4,109 $3,306 24%
Diluted Net Income
Per Share: $ .86 $ .68 26% $ 1.62 $ 1.36 19%
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For the first six months of 2004, net income totaled $4.1 million, up
$803,000 or 24%, over net income of $3.3 million for the first six months of
2003.
Net income per share, on a fully diluted basis, was $1.62 for the first
six months of 2004, a 19% increase over $1.36 for the same period in 2003.
Total Revenues
- --------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------------------- --------------------------------------------------
% %
2004 2003 Increase 2004 2003 Increase
------------------------------------------------- --------------------------------------------------
(dollars in thousands) (dollars in thousands)
Total Revenues: $14,357 $10,411 38% $27,911 $20,206 38%
Total revenues (net interest income plus non-interest income) increased
$3.9 million to $14.4 million, a 38% increase over the second quarter of 2003.
Total revenues for the second quarter of 2004 resulted from a 42%
increase in net interest income and a 23% increase in non-interest income.
Net Interest Income and Net Interest Margin
- -------------------------------------------
Net interest income for the second quarter of $11.6 million represented
a 42% increase over the $8.2 million recorded in the second quarter of 2003. For
the first six months of 2004, net interest income totaled $22.6 million, up 43%
over the $15.8 million recorded in the first six months of 2003. 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 net interest income
for the quarter and the first six months.
The net interest margin for the second quarter of 2004 was 4.35%
compared to 4.29% for the second quarter of 2003. The net interest margin for
the first six months of 2004 was 4.38%, up 16 basis points over the first half
of 2003. The increase in net interest margin was primarily due to a decrease in
the Company's cost of deposit funds to 0.92% during the first six months of 2004
versus 1.46% for the same period in 2003.
Non-Interest Income
- -------------------
Non-interest income for the second quarter of 2004 increased to $2.7
million from $2.2 million for the second quarter of 2003, a 23% increase.
Non-interest income for the first six months of 2004 was $5.3 million, a 20%
increase over the $4.4 million earned in the first six months of 2003.
The growth in non-interest income for the second quarter and the first
six months was reflected in increased deposit charges and service fees as more
fully depicted below:
5
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------------------ -----------------------------------------------
% %
2004 2003 Increase 2004 2003 Increase
------------------------------------------------ -----------------------------------------------
(dollars in thousands) (dollars in thousands)
Deposit Charges $ 2,517 $1,928 31% $ 4,758 $ 3,732 27%
& Service Fees:
Other Operating Income 199 288 (31)% 544 675 (19)%
--------------------------------------------- -----------------------------------------------
$ 2,716 $2,216 23% $ 5,302 $ 4,407 20%
Non- Interest Expenses
- ----------------------
Non-interest expenses for the second quarter of 2004 were $10.4
million, up 41% from $7.4 million recorded in the second quarter of 2003. The
increase in non-interest expenses for the second 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 five new branch offices between mid-June 2003 and
the end of December 2003, two of these representing the Company's initial entry
into the Berks County market. Also, as of June 30, 2004, seven of the Company's
23 branch offices were constructed within the past two 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 it to continue to provide its high level of
customer service and convenience.
Lending
- -------
Loans increased $187 million, or 47%, to $588 million from $401 million
at June 30, 2003. This growth was represented across all loan categories as
shown in the table on the next page.
The composition of the Company's loan portfolio is as follows:
Loan Composition
----------------
6/30/04 % of Total 6/30/03 % of Total $ Increase % Increase
---------------- -------------- --------------- ------------ ---------------- --------------
(dollars in thousands)
Commercial $ 158,364 27 % $ 96,873 24 % $ 61,491 63 %
Consumer 88,443 15 53,939 13 34,504 64
Commercial Real Estate 264,511 44 184,191 45 80,320 44
Residential 84,099 14 71,737 18 12,362 17
---------------- -------------- --------------- ------------ ---------------- --------------
Gross Loans $ 595,417 100 % $ 406,740 100 % $ 188,677
Less: Reserves (7,019) (5,667) (1,352)
---------------- --------------- ----------------
Net Loans $ 588,398 $ 401,073 $ 187,325 47 %
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Asset Quality
- -------------
Asset quality continues to be strong as non-performing assets and loans
90 days past due at June 30, 2004 totaled $1.2 million, or .11%, of total
assets, versus $1.9 million, or .24%, of total assets one year ago. Net
charge-offs as a percentage of average loans outstanding for the second quarter
of 2004 were .04%, as compared to .08% for the same period last year.
The Company's asset quality results are highlighted below:
Three Months Ended
------------------
6/30/04 6/30/03
------- -------
Non-Performing Assets/Assets 0.11% 0.24%
Net Loan Charge-Offs 0.04% 0.08%
Loan Loss Reserve/Gross Loans 1.18% 1.39%
Non-Performing Loan Coverage 855% 325%
Non-Performing Assets/Capital
and Reserves 2% 4%
Investments
- -----------
The Company's investment portfolio increased by 48%, to $503 million
from $341 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 4.97% and a
current weighted average duration of 5.3 years as of June 30, 2004.
The depreciation in the available for sale portfolio totaled
approximately $4.9 million at June 30, 2004.
Capital
- -------
Stockholders' equity at June 30, 2004 totaled $54.2 million, an
increase of 19%, over stockholder's equity of $45.4 million at June 30, 2003.
Return on average stockholders' equity ("ROE") for the second quarter of 2004
was 17.14% as compared to 14.48% for the second quarter of 2003. ROE for the
first six months of 2004 was 15.99% compared to 14.83% for the first six months
of 2003.
The Company's capital ratios at June 30, 2004 were as follows:
Regulatory Guidelines
Commerce "Well Capitalized"
-------- ------------------
Leverage Ratio 5.80% 5.00%
Tier 1 8.72 6.00
Total Capital 9.63 10.00
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Retail Activities
- -----------------
>> In the second quarter, the Company began construction on a new branch
office in Lebanon, PA. This will be the second office for Commerce
located in Lebanon County and the 24th office overall for the Company.
Grand opening celebrations will be held in the early fall of 2004.
>> "Same store core deposit growth" at June 30, 2004 was 19% compared to
the same period one year ago.
>> Commerce 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 is a member of "the Commerce Bank Network" led by Commerce
Bancorp (NYSE: CBH) in Cherry Hill, N.J.
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); the impact of the
rapid growth of the Company; the Company's dependence on Commerce Bancorp, Inc.
to provide various services to the Company; changes in the Company's allowance
for loan losses; effect of terrorists attacks and threats of actual war;
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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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