Exhibit 99.1
RECENT DEVELOPMENTS
Pennsylvania Commerce Earnings Release
On October 20, 2004, we reported the selected consolidated historical
financial and other data of Pennsylvania Commerce contained in the following
table at the dates and for the periods indicated. You should read this
information in conjunction with the audited consolidated financial statements
included in this document. The information contained in the table is unaudited.
(Unaudited)
(In thousands, except per share amounts)
For the At or for the
Three Months Ended Nine Months Ended
September 30, September 30,
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2004 2003 2004 2003
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Selected Income Statement Data:
Net interest income ...................................... $ 11,883 $ 8,150 $ 34,492 $ 23,949
Provision for loan losses ................................ 675 350 1,925 1,200
Noninterest income ....................................... 2,949 2,649 8,251 7,056
Noninterest operating expenses ........................... 10,890 8,213 31,456 22,668
Net income ............................................... 2,198 1,526 6,307 4,832
Common Share Data:
Net income per share:
Basic ................................................... $ 0.93 $ 0.67 $ 2.70 $ 2.13
Diluted 0.86 0.62 2.49 1.97
Book Value per share...................................... 24.87 20.61
Average number of shares outstanding:
Basic .................................................. 2,336 2,258 2,317 2,245
Diluted ................................................ 2,525 2,439 2,513 2,419
Selected Performance Ratios:
Cost of funds ............................................ 1.33% 1.34% 1.24% 1.54%
Deposit Cost of Funds .................................... 1.08 1.17 0.97 1.36
Net interest margin ...................................... 4.23 4.07 4.33 4.18
Return on average assets.................................. 0.73 0.69 0.74 0.77
Return on average stockholders' equity ................... 15.75 13.28 15.91 14.30
At or for the
Nine Months Ended
September 30,
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2004 2003
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Selected Balance Sheet Data:
Total assets ............................................. $ 1,205,181 $ 957,970
Loans receivable (net) ................................... 611,088 428,940
Investment securities1 ................................... 487,049 391,122
Deposits ................................................. 1,124,906 894,608
Core deposits ............................................ 1,089,626 842,437
Jr. subordinated debt .................................... 13,600 0
Trust capital securities ................................. 0 13,000
Stockholders' equity ..................................... 61,861 47,689
Selected Capital Ratios:
Stockholders' equity to total assets ..................... 5.13% 4.98%
Leverage Capital ......................................... 6.21 6.86
Risk based capital:
Tier 1 ................................................. 9.36 10.20
Total .................................................. 10.26 11.18
Asset Quality Ratios:
Net charge-offs to average loans outstanding ............. 0.13% 0.14%
Non-performing loans to total loans ...................... 0.27 0.28
Non-performing assets to total assets .................... 0.20 0.15
Allowance for loan losses to total loans ................. 1.16 1.33
Allowance for loan losses to non-performing loans ........ 436% 472%
<FN>
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1 Investment securities includes securities available for sale and securities
held to maturity.
</FN>
Total Assets, Loans and Deposits
Total assets were $1.21 billion at September 30, 2004, up $153.2
million, or 15%, from the end of 2003. This growth is attributable to an
increase in net loans receivable of $141.2 million from $469.9 million to $611.1
million. The loan growth was funded by an increase in total deposits of $218.4
million, or 24%, from $906.5 million to $1.12 billion.
Capital
At September 30, 2004, our consolidated capital ratios met the
definition of a "well-capitalized institution." On September 29, 2004, we issued
and sold 100,000 shares of our common stock to Commerce of New Jersey in a
private placement transaction at a purchase price of $45.666 per share.
Net Income
Net income for the first nine months of 2004 totaled $6.3 million, up
$1.5 million, or 31%, over net income of $4.8 million for the first nine months
of 2003. Net income per fully diluted share was $2.49 for the first nine months
of 2004, a 26% increase over $1.97 per share for the same period in 2003. The
increase in net income is primarily attributable to an increase in net interest
income and non interest income as a result of our growth, partially offset by an
increase in noninterest expenses.
Net Interest Income and Net Interest Margin
Net interest income for the first nine months of 2004 totaled $34.5
million, up 44% over the $23.9 million recorded in the first nine months of
2003. Our deposit growth fueled volume increases in the level of interest
earning assets, which resulted in the increase in net interest income for the
period.
The net interest margin for the first nine months of 2004 was 4.33%, up
15 basis points over the first nine months of 2003. The increase in net interest
margin was primarily due to a decrease in our cost of deposit funds to 0.97%
during the first nine months of 2004 versus 1.36% for the same period in 2003.
Noninterest Income
Noninterest income for the first nine months of 2004 was $8.3 million,
a 17% increase over the $7.1 million earned in the first nine months of 2003.
This was attributable to an increase in deposit service charges and fees as a
result our growth.
Noninterest Expenses
Noninterest expenses for the first nine months of 2004 were $31.5
million, up 39% from $22.7 million recorded in the same period of 2003. The
increase in noninterest expenses is primarily a result of our growth during the
last 12 months and also reflects infrastructure expenditures to support our
future growth.
Asset Quality
Asset quality continues to be strong as non-performing assets and loans
90 days past due at September 30, 2004 totaled $2.4 million, or 0.20%, of total
assets, versus $1.5 million, or 0.15%, of total assets one year ago. Net
charge-offs as a percentage of average loans outstanding for the first nine
months of 2004 were 0.13%, as compared to 0.14% for the same period last year.
Total nonaccrual loans at September 30, 2004 were $1.4 million, loans past due
90 days or more and still accruing were $52,000, foreclosed real estate was
$805,000 and troubled debt restructuring was $228,000. During the nine-month
period ended September 30, 2004, gross charge-offs were $904,000 and gross
recoveries were $148,000.