PENNSYLVANIA COMMERCE BANCORP [LOGO]
CONTACTS
--------
Gary L. Nalbandian Mark A. Zody
Chairman/President Chief Financial Officer
(717) 975-5630
PENNSYLVANIA COMMERCE BANCORP EARNINGS UP 28%
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DEPOSITS INCREASE 25%
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April 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 first quarter of 2005, it was announced today by Gary L.
Nalbandian, Chairman of the bank holding company.
FIRST QUARTER FINANCIAL HIGHLIGHTS
March 31, 2005
%
Increase(1)
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* Total Assets: $ 1.38 Billion 26%
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* Total Deposits: $ 1.17 Billion 25%
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* Total Loans (net): $ 681 Million 34%
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- --------------------------------------------------------------------------------
* Total Revenues: $ 15.4 Million 13%
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* Net Income: $ 2.5 Million 28%
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* Diluted Net Income Per Share: $ 0.39 3%
(1) Compared to First Quarter Ended March 31, 2004
In commenting on the Company's financial results, Chairman Nalbandian
said, "Our strong deposit growth of 25% and exceptional loan growth of 34% have
propelled us to $1.4 billion in total assets in only our 20th year of operation.
Some of our financial highlights were:
>> Net income increased 28% for the first quarter of 2005 to $2.5
million.
>> Revenue growth of 13% exceeded expense growth of 10% for the
first quarter.
>> Net interest income grew 11% for the first quarter of 2005. The
net interest margin decreased 5 basis points from the previous
quarter to 4.07% as caused by the flattening yield curve.
>> Earnings per share, which rose 3% for the quarter, was impacted
by a 25% increase in the number of total shares outstanding as a
result of our public stock offering in the fourth quarter of
2004.
>> Core deposits grew $243 million, or 27%, over the previous
12-month period.
>> Comparable store core deposits for stores open two years or more
grew 21%.
>> Net loans grew $174 million, or 34%, over the first quarter one
year ago.
>> The Company plans to open 3-4 new stores in 2005, with the first
opening scheduled for April 30th at Mt. Zion Road in York.
Income Statement
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Three Months Ended
March 31
-------------------------------------------------
%
2005 2004 Increase
---------------- -- --------------- -- ----------
(dollars in thousands, except per share data)
Total Revenues: $ 15,364 $13,554 13%
Total Expenses: 11,147 10,117 10
Net Income: 2,461 1,928 28
Diluted Net Income Per Share: $0.39 $0.38 3%
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Balance Sheet
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03/31/05 03/31/04 % Increase
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(dollars in thousands)
Total Assets: $ 1,377,180 $ 1,097,226 26%
Total Loans (net): 681,075 507,156 34
Core Deposits: 1,132,183 888,832 27
Total Deposits: 1,172,923 937,217 25
Shareholder Returns
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As of March 31, 2005
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Commerce S & P Index
-------- -----------
1 Year 19% 7%
5 Years 24% -3%
10 Years 24% 11%
Total Deposits
- --------------
The Company's strong growth continues with total deposits at March 31,
2005 reaching $1.2 billion, a $236 million, or 25%, increase over total deposits
of $937 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.
03/31/05 03/31/04 $ Increase % Increase
-------- -------- ---------- ----------
(dollars in thousands)
Core Deposits: $ 1,132,183 $ 888,832 $243,351 27%
Total Deposits: 1,172,923 937,217 235,706 25%
3
Core Deposits
- -------------
Core deposit growth by type of account is as follows:
1st Qtr 2005 Annual
3/31/2005 3/31/2004 Cost of Funds Growth %
---------------- ----------------- --------------------- -------------
(dollars in thousands)
Demand $ 216,587 $ 177,961 0.00% 22%
Interest Bearing Demand 421,683 287,467 1.97 47
Savings 319,081 263,638 1.23 21
---------------- ----------------- --------------------- -------------
Subtotal 957,351 729,066 1.30 31%
Time 174,832 159,766 2.71 9
---------------- ----------------- --------------------- -------------
Total Core Deposits $1,132,183 $888,832 1.39% 27%
Net Income and Net Income Per Share
- -----------------------------------
Net income totaled $2.5 million for the first quarter of 2005, up
$533,000, or 28%, over net income of $1.9 million as reported for the first
quarter of 2004.
Net income per share on a fully diluted basis for the first quarter was
$0.39, a 3% increase over the $0.38 recorded for the same period a year ago. Net
income per share for the first quarter of 2005 reflects the impact of an
additional 920,000 shares (adjusted for a two-for-one stock split) issued during
the fourth quarter of 2004 through a public stock offering and an additional
200,000 shares (adjusted for the two-for-one stock split) issued at the end of
the third quarter 2004 through a private placement.
Three Months Ended
March 31
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%
2005 2004 Increase
------------ --- ------------ --- ------------
(dollars in thousands, except per share data)
Net Income: $ 2,461 $ 1,928 28%
Diluted Net Income
Per Share: $ 0.39 $ 0.38 3%
4
Total Revenues
- --------------
Three Months Ended
March 31
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3/31/2005 3/31/2004 % Increase
------------- --- ------------- --- -------------
(dollars in thousands)
Total Revenues: $15,364 $ 13,554 13%
Total revenues (net interest income plus non-interest income) for the
first quarter increased $1.8 million to $15.4 million, a 13% increase over the
first quarter of 2004. The growth in total revenue resulted from an 11% increase
in net interest income and a 24% increase in non-interest income.
Net Interest Income and Net Interest Margin
- -------------------------------------------
Net interest income for the first quarter 2005 of $12.2 million
represented an 11% increase over the $11.0 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 net interest
income.
The net interest margin for the first quarter of 2005 was 4.07%
compared to 4.42% for the first quarter 2004. The decrease is primarily due to
an increase in the Company's cost of deposit funds to 1.46% during the first
quarter of 2005 versus 0.92% for the same period in 2004. This is a result of
the flattening yield curve, which has occurred during the fourth quarter 2004
and first quarter 2005.
Net Interest Income and Rate/Volume Analysis
- --------------------------------------------
As shown below, the increase in net interest income was due to volume
increases in the Company's earning assets, which were fueled by the Company's
continued growth of low-cost core deposits.
Net Interest Income
-------------------------------------------------------------
Quarter Ended Volume Rate Total %
March 31 Increase Change Increase Increase
- -------------------------------- --------------- --------------------------
(dollars in thousands)
2005 vs. 2004 $ 2,416 $ (1,227) $ 1,189 11%
5
Non-Interest Income
- -------------------
Non-interest income for the first quarter of 2005 increased to $3.2
million from $2.6 million a year ago, a 24% 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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%
2005 2004 Increase
----------- --- ----------- --- ------------
(dollars in thousands)
Deposit Charges
& Service Fees $2,695 $2,241 20%
Other Income 511 345 48
----------- --- ----------- --- ------------
Total Non-Interest Income $3,206 $2,586 24%
Non-Interest Expenses
- ---------------------
Non-interest expenses for the first quarter of 2005 were $11.1 million,
up 10% from $10.1 million a year ago. The increase in non-interest expenses for
the first quarter was widespread across all categories. The Company continued to
experience positive operating leverage in the first quarter, with revenue growth
of 13% exceeding non-interest expense growth of 10%.
Lending
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Loans increased $174 million, or 34%, to $681 million from $507 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
03/31/05 % of Total 03/31/04 % of Total $ Increase % Increase
------------ ----------- ----------- ------------ ------------ -------------
(dollars in thousands)
Commercial $187,049 27% $123,137 24% $63,912 52%
Consumer 115,429 17 76,310 15 39,119 51
Commercial Real Estate 299,192 43 236,918 46 62,274 26
Residential 87,757 13 77,310 15 10,447 14
------------ ---------- ----------- ------------ ------------ -------------
Gross Loans 689,427 100% 513,675 100% 175,752
Less:Reserves (8,352) (6,519) (1,833)
------------ ----------- ------------
Net Loans $681,075 $507,156 $173,919 34%
6
Asset Quality
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Asset quality continues to be strong as non-performing assets at March
31, 2005 totaled $1.9 million, or 0.14%, of total assets, versus $1.7 million,
or 0.15%, of total assets one year ago. Net charge-offs as a percentage of
average loans outstanding for the first quarter were 0.01%, the same as the
first three months of last year.
The Company's asset quality results are highlighted below:
Three Months Ended
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03/31/05 03/31/04
-------- --------
Non-Performing Assets/Assets 0.14% 0.15%
Net Loan Charge-Offs 0.01% 0.01%
Loan Loss Reserve/Gross Loans 1.21% 1.27%
Non-Performing Loan Coverage 549% 448%
Non-Performing Assets/Capital
and Reserves 2% 3%
Investments
- -----------
The Company's investment portfolio increased by 17%, to $590 million
from $504 million one year ago, with 59% of this total in the available for sale
portfolio and 41% in the held to maturity portfolio. The portfolio, consisting
mainly of high quality U.S. Government agency and mortgage-backed obligations,
has a weighted average yield of 5.04% and a current duration of 4.4 years as of
March 31, 2005.
Capital
- -------
Stockholder's equity at March 31, 2005 totaled $85.8 million, an
increase of $31.9 million, or 59%, over stockholder's equity of $53.9 million at
March 31, 2004.Return on average stockholders equity (ROE) for the first quarter
is shown in the table below:
Return on Equity
----------------
Three Months Ended
------------------
03/31/05 03/31/04
-------- --------
11.69% 14.87%
ROE for the first quarter 2005 reflects the impact of the additional
capital raised by the Company during the fourth quarter of 2004.
The Company's capital ratios at March 31, 2005 were as follows:
Regulatory Guidelines
Commerce "Well Capitalized"
-------- ---------------------
Leverage Ratio 7.88% 5.00%
Tier 1 11.19 6.00
Total Capital 12.12 10.00
Retail Activities
- -----------------
>> On April 30, 2005, the Company plans to open its 25th branch
office, located in York County.
>> "Same store core deposit growth" at March 31, 2005 was 21%
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.
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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.
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