PENNSYLVANIA COMMERCE
BANCORP
[GRAPHIC OMMITTED]
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 28%
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January 19, 2005- Camp Hill, PA - Pennsylvania Commerce Bancorp, Inc.
(NASDAQ National Market Symbol: COBH) parent company of Commerce
Bank/Harrisburg, N.A. reported record earnings and increased deposits, assets
and loans for the fourth quarter and the year ended December 31, 2004, it was
announced today by Gary L. Nalbandian, Chairman of the bank holding company.
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FOURTH QUARTER FINANCIAL HIGHLIGHTS
-----------------------------------
DECEMBER 31, 2004
%
Increase(1)
-----------------
* Total Assets: $ 1.28 Billion 21%
* Total Deposits: $ 1.16 Billion 28%
* Total Loans (net): $ 638 Million 36%
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* Total Revenues: $ 15.1 Million 18%
* Net Income: $ 2.3 Million 32%
* Diluted Net Income Per Share: $ 0.77 12%
(1) Compared to Fourth Quarter Ended December 31, 2003
==========================================================================================
In commenting on the Company's financial results, Chairman Nalbandian said,
"Our strong deposit growth of 28% and exceptional loan growth of 36% have
propelled us to $1.3 billion in total assets in only our 19th year of operation.
Our positive operating leverage for the fourth quarter and for the year 2004
produced record net income for both periods."
Some of our financial highlights were:
>> Net income increased 32% for the fourth quarter of 2004 to $2.3
million and 31% for the year ended December 31, 2004 to $8.6 million.
>> Revenue growth of 18% exceeded expense growth of 12% for the fourth
quarter.
>> Earnings per share rose 12% for the fourth quarter and 22% for 2004.
>> Net interest income grew 37% for the year ended December 31, 2004. The
net interest margin for the year was 4.28% vs. 4.20% for 2003.
>> Core deposits grew $265 million, or 31%, for the year.
>> Comparable store core deposits for stores open two years or more grew
28%.
>> Total loans grew $169 million, or 36%, for the year.
>> On November 2, 2004, the Company successfully completed its public
stock offering with net proceeds totaling $20.8 million to support
future growth.
>> For 2005, the Company plans to open 3-4 new stores.
Income Statement
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Three Months Ended Year Ended
December 31, December 31,
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% %
2004 2003 Increase 2004 2003 Increase
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(dollars in thousands, except per share data) (dollars in thousands, except per share data)
Total Revenues: $15,138 $12,875 18% $57,881 $43,880 32%
Total Expenses: 11,010 9,842 12% 42,466 32,510 31%
Net Income: 2,284 1,725 32% 8,591 6,557 31%
Diluted Net Income Per Share: $ 0.77 $ 0.69 12% $ 3.26 $ 2.68 22%
Balance Sheet
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12/31/04 12/31/03 % Increase
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(dollars in thousands)
Total Assets: $1,277,367 $1,051,989 21%
Total Loans (net): 638,496 469,937 36%
Core Deposits: 1,122,524 857,978 31%
Total Deposits: 1,160,547 906,527 28%
Shareholder Returns
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As of December 31, 2004
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Commerce S & P Index
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1 Year 30% 11%
5 Years 30% -2%
10 Years 24% 12%
Total Deposits
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The Company's strong growth continues with total deposits at December 31,
2004 reaching $1.16 billion, a $254 million, or 28%, increase over total
deposits of $907 million one year ago. 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.
12/31/04 12/31/03 $ Increase % Increase
-------- -------- ---------- ----------
(dollars in thousands)
Core Deposits: $1,122,524 $ 857,978 $ 264,546 31%
Total Deposits: 1,160,547 906,527 254,020 28%
Core Deposits
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Core deposit growth by type of account is as follows:
4th Qtr 2004 Annual
12/31/04 12/31/03 Cost of Funds Growth %
---------- ---------- ------------- --------
(dollars in thousands)
Demand $ 206,393 $ 170,414 0.00% 21%
Interest Bearing Demand 435,859 304,311 1.70 43%
Savings 307,377 242,793 1.19 27%
---------- ---------- ---- ----------
Subtotal 949,629 717,518 1.19 32%
Time 172,895 140,460 2.59 23%
---------- ---------- ---- ----------
Total Core Deposits $1,122,524 $ 857,978 1.35% 31%
---------- ---------- ---- ----------
Net Income and Earnings Per Share
- ---------------------------------
Net income totaled $2.3 million for the fourth quarter of 2004, up
$559,000, or 32%, over net income of $1.7 million as reported for the fourth
quarter of 2003.
Net income per share on a fully diluted basis for the fourth quarter was
$0.77, a 12% increase over the $0.69 recorded for the same period a year ago.
E.P.S. for both the fourth quarter 2004 and for the year ended December 31, 2004
reflect the impact of an additional 460,000 shares issued during the quarter
through a public stock offering, as well as an additional 100,000 shares issued
at the end of the third quarter 2004 through a private placement.
Three Months Ended Year Ended
December 31, December 31,
--------------------------------------------- ----------------------------------------
% %
2004 2003 Increase 2004 2003 Increase
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(dollars in thousands, except per share data) (dollars in thousands, except per share data)
Net Income: $ 2,284 $1,725 32% $ 8,591 $6,557 31%
Diluted Net Income
Per Share: $ 0.77 $ 0.69 12% $ 3.26 $ 2.68 22%
For the year ended December 31, 2004, net income totaled $8.6 million, up
$2.0 million, or 31%, over net income of $6.6 million for the year ended
December 31, 2003.
Net income per fully diluted share was $3.26 for the year ended December
31, 2004 compared to $2.68 for the year ended December 31, 2003, an increase of
22%.
Total Revenues
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Three Months Ended Year Ended
December 31, December 31,
----------------------------------------------------- ---------------------------------------------------
12/31/04 12/31/03 % Increase 12/31/04 12/31/03 % Increase
----------------------------------------------------- ---------------------------------------------------
(dollars in thousands) (dollars in thousands)
Total Revenues: $ 15,138 $ 12,875 18% $ 57,881 $ 43,880 32%
Total revenues (net interest income plus non-interest income) for the
fourth quarter increased $2.2 million to $15.1 million, an 18% increase over the
fourth quarter of 2003. The growth in total revenue for the fourth quarter
resulted primarily from a 22% increase in net interest income.
Total revenues for the year ended December 31, 2004 increased by $ 14.0
million, or 32%, over the year ended December 31, 2003. This increase was the
result of a 37% increase in net interest income and a 13% increase in
non-interest income.
Net Interest Income and Net Interest Margin
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Net interest income for the fourth quarter of $12.1 million represented a
22% increase over the $9.9 million recorded a year ago. For the year ended
December 31, 2004, net interest income totaled $46.6 million, up $12.7 million,
or 37%, over $33.9 million for the year ended December 31, 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 both the quarter and the year.
The net interest margin for the fourth quarter of 2004 was 4.12% compared
to 4.20% for the fourth quarter 2003. The decrease is primarily due to an
increase in the Company's cost of funds to 1.55% during the fourth quarter of
2004 versus 1.22% for the same period in 2003. The net interest margin for the
year ended December 31, 2004 was 4.28%, up 8 basis points over the net interest
margin for the year ended December 31, 2003.
Non-Interest Income
- -------------------
Non-interest income for the fourth quarter of 2004 increased to $3.0
million from $2.9 million a year ago, a 4% increase. Excluding the net gain on
sale of investment securities recognized during the fourth quarter of 2003,
non-interest income increased by 30% during the fourth quarter of 2004 compared
to the same period one year ago.
Non-interest income for the year 2004 increased to $11.3 million from $10.0
million in 2003, a 13% increase. Excluding securities gains, non-interest income
for the year ended December 31, 2004 increased by 24% over the year ended
December 31, 2003.
The growth in non-interest income for the fourth quarter and year ended was
reflected in increased deposit charges and service fees as more fully depicted
below:
Three Months Ended Year Ended
December 31, December 31,
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% %
2004 2003 Increase 2004 2003 Increase
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(dollars in thousands) (dollars in thousands)
Deposit Charges
& Service Fees $ 2,787 $ 2,159 29% $ 10,252 $ 7,968 29%
Other Operating Income 258 183 41% 1,044 1,142 (9)%
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Subtotal 3,045 2,342 30% 11,296 9,110 24%
Net Investment Securities
Gains - 592 - - 880 -
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Total Non-Interest Income $ 3,045 $ 2,934 4% $ 11,296 $ 9,990 13%
Non-Interest Expenses
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Non-interest expenses for the fourth quarter of 2004 were $11.0 million, up
12% from $9.8 million a year ago. Non-interest expenses for the year 2004 were
$42.5 million, up 31% from $32.5 million for the year 2003. The increase in
non-interest expenses for the fourth quarter and the year 2004 are primarily a
result of the Company's store expansion and also reflect substantial
infrastructure expenditures made by the Company to support future growth. The
Company continued to experience positive operating leverage in the fourth
quarter, with revenue growth of 18% exceeding non-interest expense growth of
12%.
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 December 31, 2004, seven of the Company's
24 branch offices were constructed within the past two years. As a result of
this 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
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Loans increased $169 million, or 36%, to $638.5 million from $469.9 million
a year ago, and the growth was represented across all loan categories.
The composition of the Company's loan portfolio is as follows:
Loan Composition
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12/31/04 % of Total 12/31/03 % of Total $ Increase % Increase
----------------- -------------- --------------- ------------- ----------------- --------------
(dollars in thousands)
Commercial $ 172,733 27 % $ 105,164 22 % $ 67,569 64 %
Consumer 109,569 17 71,007 15 38,562 54
Commercial Real Estate 277,672 43 222,913 47 54,759 25
Residential 86,369 13 76,860 16 9,509 12
----------------- -------------- --------------- ------------- ----------------- --------------
Gross Loans $ 646,343 100 % $ 475,944 100 % $ 170,399
Less: Reserves (7,847) (6,007) (1,840)
----------------- --------------- -----------------
Net Loans $ 638,496 $ 469,937 $ 168,559 36 %
Asset Quality
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Asset quality continues to be strong as non-performing assets at December
31, 2004 totaled $1.4 million, or 0.11%, of total assets, versus $1.4 million,
or 0.13%, of total assets one year ago. Net charge-offs as a percentage of
average loans outstanding for the year 2004 were 0.14% as compared to 0.20% for
2003.
The Company's asset quality results are highlighted below:
Year Ended
----------
12/31/04 12/31/03
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Non-Performing Assets/Assets 0.11% 0.13%
Net Loan Charge-Offs 0.14% 0.20%
Loan Loss Reserve/Gross Loans 1.21% 1.26%
Non-Performing Loan Coverage 916% 513%
Non-Performing Assets/Capital
and Reserves 2% 3%
Investments
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The Company's investment portfolio increased by 10%, to $524.0 million from
$475.3 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 5.11% and a current duration of 4.0 years as of December 31, 2004.
Capital
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Stockholder's equity at December 31, 2004 totaled $85.0 million, an
increase of $35.3 million, or 71%, over stockholder's equity of $49.7 million at
December 31, 2003. Return on average stockholders equity (ROE) for the fourth
quarter and year ended December 31, 2004 is shown in the table below:
Return on Equity
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Three Months Ended Year Ended
------------------ ----------
12/31/04 12/31/03 12/31/04 12/31/03
-------- -------- -------- --------
12.36% 14.16% 14.78% 14.27%
The Company completed a public stock offering on November 2, 2004, issuing
460,000 shares at $49.00 per share with net proceeds totaling $20.8 million.
The Company's capital ratios at December 31, 2004 were as follows:
Regulatory Guidelines
Commerce "Well Capitalized"
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Leverage Ratio 7.79% 5.00%
Tier 1 11.57 6.00
Total Capital 12.49 10.00
Retail Activities
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>> In October, the Company opened its 24th branch office, located in
Lebanon County.
>> "Same store core deposit growth" at December 31, 2004 was 28% compared
to the same period one year ago.
>> 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.
FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION
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;
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.