Pacific Continental Corporation Reports Fourth Quarter and Annual 2015 Results

Earnings driven by strong growth, expense control, successful acquisition, and solid credit quality.

Jan 20, 2016, 16:31 ET from Pacific Continental Corporation

EUGENE, Ore., Jan. 20, 2016 /PRNewswire/ -- Pacific Continental Corporation (Nasdaq: PCBK), the holding company of Pacific Continental Bank, today reported financial results for the fourth quarter and year ended December 31, 2015.

Fourth Quarter highlights:

  • Achieved record net income of $5.5 million, or $0.28 per diluted share.
  • Achieved a return on average assets of 1.16%.
  • Improved tax-equivalent net interest margin to 4.36%.
  • Efficiency ratio of 55.50%.
  • Declared first quarter 2016 regular quarterly cash dividend of $0.11 per share.
  • Recognized for the 16th consecutive year by Oregon Business magazine and for the 5th consecutive year by Seattle Business magazine as one of the Top 100 Companies to Work For.
  • Recognized by Seattle Business magazine as the Business of the Year.

Full Year 2015 Highlights:

  • Asset growth of $405 million, or 26.93%.
  • Achieved annual net income of $18.8 million, or $0.97 per diluted share.
  • Achieved a return on assets of 1.05%.
  • Achieved a tax-equivalent net interest margin of 4.34%.
  • Achieved organic loan growth of $156.6 million.

Net Income Net income for fourth quarter 2015 was $5.5 million or $0.28 per diluted share compared to net income of $3.6 million or $0.20 per diluted share in fourth quarter 2014.  Annualized returns on average assets, average equity and average tangible equity for fourth quarter 2015 were 1.16%, 10.10%, and 12.60%, respectively, compared to 0.97%, 7.85%, and 9.01% for fourth quarter 2014.  In addition, the Company's efficiency ratio improved to 55.50% for fourth quarter 2015 compared to 61.39% for the same quarter in 2014.

Net income for the full-year 2015 was $18.8 million, or $0.97 per diluted share, compared to net income of $16.0 million, or $0.89 per diluted share for the full year 2014.  Return on average assets, average equity and average tangible equity for the full year 2015 were 1.05%, 8.99%, and 11.14%, respectively, compared to 1.09%, 8.83%, and 10.14% for the full year 2014.  The Company's efficiency ratio improved to 59.22% for full year 2015 compared to 59.41% for the full year 2014.  Included in our 2015 expenses was $1.8 million in costs associated with the acquisition of Capital Pacific Bank, compared to $470 thousand in 2014.

"We are very proud of our outstanding results accomplished by our talented and dedicated team of community bankers and support teams for both the fourth quarter and full-year of 2015," said Roger Busse, chief executive officer.  "We continued to execute on our commitment to quality growth, as is reflected in reporting our third consecutive quarter of record earnings."

Loans Gross loans grew by $49 million in fourth quarter 2015, and totaled $1.41 billion at December 31, 2015.  Organic loan growth during the fourth quarter 2015 was primarily attributable to increased commercial and industrial lending, funding of construction loans, and local real estate lending.  Loan growth during the quarter occurred in all three of the Company's primary markets.  Loans to dental professionals were flat from the previous quarter.  At December 31, 2015, loans to dental practitioners totaled $340.2 million and represented 24.19% of the loan portfolio.  The average tax-equivalent yield on the loan portfolio was 5.22% for the fourth quarter and 5.29% for the full-year 2015.

"Our loan growth was outstanding in 2015 and the fourth quarter was no exception with almost $50 million in organic loan growth," said Casey Hogan, chief operating officer. "Our organic loan growth for the full year 2015 was approximately $157 million, which is on top of the $203 million in loans from the Capital Pacific acquisition. We further expanded existing relationships while growing in our markets with new clients and opportunities, and continue to be pleased with our strong pipelines as we head into the new year."

Core Deposits Period-end Company-defined core deposits at December 31, 2015, were $1.53 billion.  Outstanding core deposits were up $68.4 million during the fourth quarter 2015.  At December 31, 2015, noninterest-bearing demand deposits totaled $568.7 million and represented 37.07% of core deposits.  Cost of funds on core deposits was 0.26% for both the fourth quarter and full-year 2015.

Credit Quality and Statistics During the fourth quarter, the Company made a $520 thousand provision for loan losses and compared to $625 in the third quarter 2015. Fourth quarter 2015 provision for loan losses was primarily related to the loan growth experienced during the quarter, as credit quality statistics remained strong.  As of December 31, 2015, the allowance for loan losses as a percentage of outstanding loans was 1.23%, approximately the same as it was as of September 30, 2015.  With the acquisition of the Capital Pacific loan portfolio, the allowance for loan losses as a percentage of outstanding loans at December 31, 2015, declined to 1.23%, compared to 1.50% at December 31, 2014.  This was a result of recording the Capital Pacific Bank acquired loans at their fair value, which included all credit risk adjustments. At December 31, 2015, the allowance for loan losses as a percentage of nonperforming loans, net of government guarantees, remained strong at 636.30%. During the fourth quarter 2015, the Company recorded net loan recoveries of $169 thousand.  For the full-year 2015, the Company recorded $31 thousand in net loan charge-offs.

At December 31, 2015, nonperforming assets, net of government guarantees, totaled $14.5 million, or 0.76% of total assets, compared to $14.1 million, or 0.75% of total assets, and $15.4 million, or 1.02% of total assets, at September 30, 2015 and December 31, 2014, respectively. Nonperforming assets at December 31, 2015, were comprised of $2.7 million of nonperforming loans, net of government guarantees, and $11.7 million in other real estate owned. Loans past-due 30-89 days were 0.03% of total loans at December 31, 2015, compared to 0.14% of total loans at September 30, 2015 and 0.15% of total loans at December 31, 2014. 

Net Interest Margin The fourth quarter 2015 net interest margin averaged 4.36%, an increase of four basis points over third quarter 2015 net interest margin, and an 11 basis point improvement over fourth quarter 2014 net interest margin.  The increase in the linked-quarter net interest margin was primarily due to accretion of acquired loan fair value marks. The net accretion added 15 basis points to the fourth quarter 2015 margin, compared to 13 basis points for third quarter 2015.  During fourth quarter 2015, the net accretion of loan fair value marks was $671 thousand, compared to $616 thousand for third quarter 2015.  Accretion of fair value marks related to both the Capital Pacific acquisition completed in March 2015 and the Century Bank acquisition completed in February 2013.   

Noninterest Income and Expense Fourth quarter 2015 noninterest income was $2.0 million, up $294 thousand from third quarter 2015, and up $690 thousand from fourth quarter 2014. The increase in linked-quarter noninterest income was primarily due to gains on sales of securities. During the fourth quarter 2015, the bank sold approximately $16.5 million of securities, realizing a gain on sale of $337 thousand.  The proceeds will be reinvested with a minimal impact to the duration and yield of the portfolio.  The year-over-year increase in noninterest income was due to increases in account and other service charges resulting from a combination of the Capital Pacific acquisition and organic growth and an increase in gain on sale of investment securities.    

"We will continue to look for opportunities for gains when appropriate, however our strategy is to ensure that any proceeds can be reinvested to achieve a minimal change in our portfolio yield, while remaining within our duration policy guidelines," said Rick Sawyer, chief financial officer.

Noninterest expense in fourth quarter 2015 was $11.7 million, an increase of $524 thousand from third quarter 2015.  The increase relates primarily to the salaries and benefits category, which increased by $456 thousand due primarily to new staff, an adjustment to the valuation of our liability based equity awards due to an increase in our stock price, and additional bonus expense required to bring the year-end accrual up to date. 

Capital Levels The Company's consolidated capital ratios continued to be above the minimum thresholds for the FDIC's "well-capitalized" designation. At December 31, 2015, the Company's Tier 1 leverage ratio, Common Equity Tier 1 risk-based capital ratio, Tier 1 risk-based capital ratio, and Total risk-based capital ratios were 9.93%, 10.97%, 11.47%, and 12.58%, respectively. These ratios reflect the effectiveness of the U.S. Basel III regulatory capital rules.  The FDIC's minimum thresholds for a "well-capitalized" designation for these metrics were 5.00%, 6.50%, 8.00% and 10.00%, respectively.

Non-GAAP Financial Measures In addition to results presented in accordance with generally accepted accounting principles (GAAP), this press release contains certain non-GAAP financial measures. The Company believes that such non-GAAP financial measures provide investors with information useful in understanding the Company's financial performance; however, readers of this release are urged to review these non-GAAP financial measures in conjunction with the GAAP results as reported.

Financial measures such as tangible shareholders' equity, and tangible assets, are considered non-GAAP measures. Management believes including non-GAAP measures along with GAAP measures provides investors with a broader understanding of capital adequacy, funding sources and revenue trends. Tangible shareholders' equity is calculated as total shareholders' equity less goodwill and core deposit intangible assets. Additionally, tangible assets are calculated as total assets less goodwill and core deposit intangible assets.

The following table presents a reconciliation of ending total shareholders' equity (GAAP) to ending tangible shareholders' equity (non-GAAP), and total assets (GAAP) to total tangible assets (non-GAAP)

December 31,

September 30,

December 31,

2015

2015

2014

(In thousands)

Total shareholders' equity

$       218,491

$        216,676

$       184,161

Subtract:

Goodwill

39,255

39,074

22,881

Core deposit intangible assets

3,904

4,028

614

Tangible shareholders' equity (non-GAAP)

$       175,332

$        173,574

$       160,666

Total assets

$    1,909,478

$     1,878,283

$    1,504,325

Subtract:

Goodwill

39,255

39,074

22,881

Core deposit intangible assets

3,904

4,028

614

Total tangible assets (non-GAAP)

$    1,866,319

$     1,835,181

$    1,480,830

 

Conference Call and Audio Webcast Management will conduct a live conference call and audio webcast for interested parties relating to the Company's results for the fourth quarter 2015 on Thursday, January 21, 2016, at 11:00 a.m. Pacific / 2:00 p.m. Eastern. To listen to the conference call, interested parties should call: (855) 215-7498 Passcode: 1554389. Following the formal remarks, a question and answer session will be open to all interested parties. The webcast will be available via Pacific Continental's website www.therightbank.com. To listen to the live audio webcast, click on the webcast presentation link on the Company's home page a few minutes before the presentation is scheduled to begin. An audio webcast replay is typically available within twenty-four hours following the live webcast and will be archived for one year on the Pacific Continental website. Any questions regarding the conference call presentation or webcast should be directed to Shannon Coffin, executive administrative assistant, at 541-686-8685.

About Pacific Continental Bank Pacific Continental Bank, the operating subsidiary of Pacific Continental Corporation, delivers highly personalized services through fifteen banking offices in Oregon and Washington. The Bank also operates loan production offices in Tacoma, Washington, Denver, Colorado and San Francisco, California. Pacific Continental, with approximately $1.9 billion in assets, has established one of the most unique and attractive metropolitan branch networks in the Pacific Northwest with offices in three of the region's largest markets, including Seattle, Portland and Eugene. Pacific Continental targets the banking needs of community-based businesses, health care professionals, professional service providers and nonprofit organizations.

Since its founding in 1972, Pacific Continental Bank has been honored with numerous awards and recognitions from highly regarded third-party organizations including The Seattle Times, the Portland Business Journal, the Seattle Business magazine and Oregon Business magazine. A complete list of the company's awards and recognitions – as well as supplementary information about Pacific Continental Bank – can be found online at www.therightbank.com. Pacific Continental Corporation's shares are listed on the Nasdaq Global Select Market under the symbol "PCBK" and are a component of the Russell 2000 Index.

Forward-Looking Statement Safe Harbor This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"). These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as "anticipates," "targets," "expects," "estimates," "intends," "plans," "goals," "believes" and other similar expressions or future or conditional verbs such as "will," "should," "would" and "could." The forward-looking statements made represent Pacific Continental's current estimates, projections, expectations, plans or forecasts of its future results and revenues, including but not limited to statements about performance, loan or deposit growth, capital position, liquidity, credit quality, credit quality trends, competition, securities portfolio and economic conditions generally and the impact and effects of recent acquisitions. These statements are not guarantees of future results or performance and involve certain risks, uncertainties and assumptions that are difficult to predict and are often beyond Pacific Continental's control. Actual outcomes and results may differ materially from those expressed in, or implied by, any of these forward-looking statements. You should not place undue reliance on any forward-looking statement and should consider all of the following uncertainties and risks, as well as those more fully discussed under "Risk Factors", "Business", and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Pacific Continental's most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and in any of Pacific Continental's subsequent SEC filings, including the high concentration of loans of the Company's banking subsidiary in commercial and residential real estate lending and in loans to dental professionals; adverse economic trends in the United States and the markets we serve affecting the Bank's borrower base; continued erosion or sustained low levels of consumer confidence; changes in the Federal Reserve's monetary policies and the regulatory environment and increases in associated costs, particularly ongoing compliance expenses and resource allocation needs; vendor quality and efficiency; the Company's ability to control risks associated with rapidly changing technology both from an internal perspective as well as for external providers; operational systems or infrastructure failures; increased competition; fluctuating interest rates; a tightening of available credit; the potential adverse impact of legal or regulatory proceedings; and risks related to acquisitions, including integration, retention of key personnel and business, anticipated cost savings and results and performance of the acquired company or the combined entity. Pacific Continental Corporation undertakes no obligation to publicly revise or update any forward-looking statement to reflect the impact of events or circumstances that arise after the date of this release. This statement is included for the express purpose of invoking the PSLRA's safe harbor provisions.

 

PACIFIC CONTINENTAL CORPORATION

Consolidated Income Statements

(In thousands, except share and per share amounts)

(Unaudited)

Three months ended

Linked 

Year over

December 31,

September 30,

December 31,

Quarter

Year  

2015

2015

2014

% Change

% Change

Interest and dividend income

Loans

$         17,674

$          17,240

$         13,464

2.52%

31.27%

Taxable securities

1,707

1,713

1,499

-0.35%

13.88%

Tax-exempt securities

485

490

500

-1.02%

-3.00%

Federal funds sold & interest-bearing deposits with banks

11

7

3

57.14%

266.67%

19,877

19,450

15,466

2.20%

28.52%

Interest expense

Deposits

805

854

782

-5.74%

2.94%

Federal Home Loan Bank & Federal Reserve borrowings

191

227

251

-15.86%

-23.90%

Junior subordinated debentures

57

57

57

0.00%

0.00%

Federal funds purchased

2

4

2

-50.00%

0.00%

1,055

1,142

1,092

-7.62%

-3.39%

Net interest income

18,822

18,308

14,374

2.81%

30.94%

Provision for loan losses

520

625

-

-16.80%

NA

Net interest income after provision for loan losses

18,302

17,683

14,374

3.50%

27.33%

Noninterest income

Service charges on deposit accounts

705

703

552

0.28%

27.72%

Bankcard income

342

276

294

23.91%

16.33%

Bank-owned life insurance income

156

156

120

0.00%

30.00%

Gain on sale of investment securities

337

143

-

135.66%

NA

Impairment losses on investment securities (OTTI)

(8)

-

-

NA

NA

Other noninterest income

476

436

352

9.17%

35.23%

2,008

1,714

1,318

17.15%

52.35%

Noninterest expense

Salaries and employee benefits

7,278

6,822

5,704

6.68%

27.59%

Premises and equipment

1,126

1,148

910

-1.92%

23.74%

Data processing

916

838

701

9.31%

30.67%

Legal and professional fees

538

496

364

8.47%

47.80%

Business development

507

369

472

37.40%

7.42%

FDIC insurance assessment

282

283

221

-0.35%

27.60%

Other real estate expense

42

122

111

-65.57%

-62.16%

Merger related expenses(1)

-

-

470

NA

-100.00%

Other noninterest expense

1,017

1,104

845

-7.88%

20.36%

11,706

11,182

9,798

4.69%

19.47%

Income before provision for income taxes

8,604

8,215

5,894

4.74%

45.98%

Provision for income taxes

3,076

2,890

2,263

6.44%

35.93%

Net income

$           5,528

$            5,325

$           3,631

3.81%

52.24%

Earnings per share:

Basic

$             0.28

$              0.27

$             0.20

3.70%

40.00%

Diluted

$             0.28

$              0.27

$             0.20

3.70%

40.00%

Weighted average shares outstanding:

Basic

19,598,484

19,591,666

17,717,151

Common stock equivalents attributable to stock-based awards

167,614

225,104

222,482

Diluted

19,766,098

19,816,770

17,939,633

PERFORMANCE RATIOS

Return on average assets 

1.16%

1.14%

0.97%

Return on average equity (book) 

10.10%

9.91%

7.85%

Return on average equity (tangible) (2)

12.60%

12.42%

9.01%

Net interest margin - fully tax-equivalent yield (3)

4.36%

4.32%

4.25%

Efficiency ratio (4)

55.50%

55.12%

61.39%

.

(1) Represents expenses associated with the acquisition of Capital Pacific Bank, completed during the first quarter 2015.

(2) Tangible equity excludes goodwill and core deposit intangible assets related to acquisitions.

(3) Net interest margin is reported on a tax-equivalent yield basis at a 35% tax rate.

(4)Efficiency ratio is noninterest expense as a percent of net interest income (on a tax-equivalent basis) plus noninterest income.

NA  Not applicable

 

PACIFIC CONTINENTAL CORPORATION

Year-to-Date Consolidated Income Statements

(In thousands, except share and per share amounts)

(Unaudited)

Twelve months ended

Year over

December 31,

December 31,

Year  

2015

2014

% Change

Interest and dividend income

Loans

$         65,694

$         53,855

21.98%

Taxable securities

6,532

6,191

5.51%

Tax-exempt securities

1,976

1,971

0.25%

Federal funds sold & interest-bearing deposits with banks

34

10

240.00%

74,236

62,027

19.68%

Interest expense

Deposits

3,314

3,252

1.91%

Federal Home Loan Bank & Federal Reserve borrowings

885

1,088

-18.66%

Junior subordinated debentures

226

225

0.44%

Federal funds purchased

11

14

-21.43%

4,436

4,579

-3.12%

Net interest income

69,800

57,448

21.50%

Provision for loan losses

1,695

-

NA

Net interest income after provision for loan losses

68,105

57,448

18.55%

Noninterest income

Service charges on deposit accounts

2,644

2,134

23.90%

Bankcard income

1,029

951

8.20%

Bank-owned life insurance income

592

473

25.16%

Gain (loss) on sale of investment securities

672

(34)

2076.47%

Impairment losses on investment securities (OTTI)

(22)

-

NA

Other noninterest income

1,710

1,471

16.25%

6,625

4,995

32.63%

Noninterest expense

Salaries and employee benefits

27,501

23,555

16.75%

Premises and equipment

4,347

3,735

16.39%

Data processing

3,259

2,720

19.82%

Legal and professional fees

1,924

1,252

53.67%

Business development

1,640

1,531

7.12%

FDIC insurance assessment

1,051

868

21.08%

Other real estate expense

346

449

-22.94%

Merger related expense(1)

1,836

470

290.64%

Other noninterest expense

3,986

3,149

26.58%

45,890

37,729

21.63%

Income before provision for income taxes

28,840

24,714

16.69%

Provision for income taxes

10,089

8,672

16.34%

Net income

$         18,751

$         16,042

16.89%

Earnings per share:

Basic

$             0.97

$             0.90

7.78%

Diluted

$             0.97

$             0.89

8.99%

Weighted average shares outstanding:

Basic

19,250,838

17,821,580

Common stock equivalents attributable to stock-based awards

141,487

223,448

Diluted

19,392,325

18,045,028

PERFORMANCE RATIOS

Return on average assets 

1.05%

1.09%

Return on average equity (book) 

8.99%

8.83%

Return on average equity (tangible) (2)

11.14%

10.14%

Net interest margin - fully tax-equivalent yield (3)

4.34%

4.30%

Efficiency ratio(4)

59.22%

59.41%

(1) Represents expenses associated with the acquisition of Capital Pacific Bank, completed during the first quarter 2015.

(2) Tangible equity excludes goodwill and core deposit intangible assets related to acquisitions.

(3) Net interest margin is reported on a tax-equivalent yield basis at a 35% tax rate.

(4)Efficiency ratio is noninterest expense as a percent of net interest income (on a tax-equivalent basis) plus noninterest income.

NA Not applicable

 

 

PACIFIC CONTINENTAL CORPORATION

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)

Linked 

Year over

December 31,

September 30,

December 31,

Quarter

Year  

2015

2015

2014

% Change

% Change

ASSETS

Cash and due from banks

$         23,819

$          21,698

$         20,929

9.78%

13.81%

Interest-bearing deposits with banks

12,856

11,293

4,858

13.84%

164.64%

Total cash and cash equivalents

36,675

32,991

25,787

11.17%

42.22%

Securities available-for-sale

366,598

387,073

351,946

-5.29%

4.16%

Loans, net of deferred fees

1,404,482

1,355,807

1,045,021

3.59%

34.40%

Allowance for loan losses

(17,301)

(16,612)

(15,637)

4.15%

10.64%

Interest receivable

5,721

5,688

4,773

0.58%

19.86%

Federal Home Loan Bank stock

5,208

6,768

10,019

-23.05%

-48.02%

Property and equipment, net of accumulated depreciation

18,014

17,708

17,820

1.73%

1.09%

Goodwill and intangible assets

43,159

43,102

23,495

0.13%

83.69%

Deferred tax asset

5,670

5,319

4,464

6.60%

27.02%

Other real estate owned

11,747

11,854

13,374

-0.90%

-12.17%

Bank-owned life insurance

22,884

22,727

16,609

0.69%

37.78%

Other assets

6,621

5,858

6,654

13.02%

-0.50%

Total assets

$    1,909,478

$     1,878,283

$    1,504,325

1.66%

26.93%

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits

Noninterest-bearing demand

$       568,688

$        544,009

$       407,311

4.54%

39.62%

Savings and interest-bearing checking

889,802

831,933

646,101

6.96%

37.72%

Core time deposits

75,452

89,605

57,449

-15.79%

31.34%

Total core deposits (2)

1,533,942

1,465,547

1,110,861

4.67%

38.09%

Non-core time deposits

63,151

59,407

98,232

6.30%

-35.71%

Total deposits

1,597,093

1,524,954

1,209,093

4.73%

32.09%

Securities sold under agreements to repurchase

71

302

93

-76.49%

-23.66%

Federal funds and overnight funds purchased

-

5,000

-

-100.00%

NA

Federal Home Loan Bank borrowings

77,500

116,500

96,000

-33.48%

-19.27%

Junior subordinated debentures

8,248

8,248

8,248

0.00%

0.00%

Accrued interest and other payables

8,075

6,603

6,730

22.29%

19.99%

Total liabilities

1,690,987

1,661,607

1,320,164

1.77%

28.09%

Shareholders' equity

Common stock: 50,000,000 shares authorized. Shares issued and outstanding: 19,604,192 at December 31, 2015, 19,591,703 at September 30, 2015 and 17,716,776 at December 31, 2014

156,099

155,695

131,375

0.26%

18.82%

Retained earnings

59,693

56,320

48,984

5.99%

21.86%

Accumulated other comprehensive income

2,699

4,661

3,802

-42.09%

-29.01%

218,491

216,676

184,161

0.84%

18.64%

Total liabilities and shareholders' equity

$    1,909,478

$     1,878,283

$    1,504,325

1.66%

26.93%

CAPITAL RATIOS

Total capital (to risk weighted assets) (3)

12.58%

12.58%

15.73%

Tier I capital (to risk weighted assets)(3)

11.47%

11.49%

14.48%

Common equity tier 1 capital (to risk weighted assets)(3)

10.97%

11.00%

NA

Tier I capital (to leverage assets) (3)

9.93%

9.88%

11.33%

Tangible common equity (to tangible assets)(1)

9.39%

9.46%

10.85%

Tangible common equity (to risk-weighted assets)(1)

10.96%

11.08%

14.11%

OTHER FINANCIAL DATA

Shares outstanding at end of period

19,604,192

19,591,703

17,716,776

Tangible shareholders' equity(1)

$       175,332

$        173,574

$       160,666

Book value per share

$           11.15

$            11.06

$           10.39

Tangible book value per share

$             8.94

$              8.86

$             9.07

(1)Tangible common equity excludes goodwill and core deposit intangible assets related to acquisitions.

(2)Core deposits include demand, interest checking, money market, savings, and local time deposits, including local nonpublic time deposits in excess of $100 thousand.  

(3)In first quarter 2015, the U.S. Basel III capital framework methodology was implemented for all banks.  The 2015 capital ratios have been presented based on the new methodology. Capital ratios prior to 2015 have not been restated in conformity with the new methodology.  

 

PACIFIC CONTINENTAL CORPORATION

Loans by Type

(In thousands)

(Unaudited)

Linked 

Year over

December 31,

September 30,

December 31,

Quarter

Year  

2015

2015

2014

% Change

% Change

LOANS BY TYPE

Real estate secured loans:

Permanent loans:

Multi-family residential

$         66,445

$          64,083

$         51,586

3.69%

28.80%

Residential 1-4 family

53,776

58,313

47,222

-7.78%

13.88%

Owner-occupied commercial

364,742

353,255

259,805

3.25%

40.39%

Nonowner-occupied commercial

300,774

288,539

201,558

4.24%

49.22%

Total permanent real estate loans

785,737

764,190

560,171

2.82%

40.27%

Construction loans:

Multi-family residential

7,027

9,340

8,472

-24.76%

-17.06%

Residential 1-4 family

30,856

30,834

28,109

0.07%

9.77%

Commercial real estate

42,680

39,259

18,595

8.71%

129.52%

Commercial bare land and acquisition & development

20,537

16,947

12,159

21.18%

68.90%

Residential bare land and acquisition & development

7,268

7,602

6,632

-4.39%

9.59%

Total construction real estate loans

108,368

103,982

73,967

4.22%

46.51%

Total real estate loans

894,105

868,172

634,138

2.99%

41.00%

Commercial loans

501,976

479,018

406,568

4.79%

23.47%

Consumer loans

3,351

3,575

3,862

-6.27%

-13.23%

Other loans

6,580

6,280

1,443

4.78%

355.99%

Gross loans

1,406,012

1,357,045

1,046,011

3.61%

34.42%

Deferred loan origination fees

(1,530)

(1,238)

(990)

23.59%

54.55%

1,404,482

1,355,807

1,045,021

3.59%

34.40%

Allowance for loan losses

(17,301)

(16,612)

(15,637)

4.15%

10.64%

$    1,387,181

$     1,339,195

$    1,029,384

3.58%

34.76%

SELECTED MARKET LOAN DATA

  Eugene market gross loans, period-end

$       379,048

$        368,666

$       363,953

2.82%

4.15%

  Portland market gross loans, period-end

667,995

647,527

407,466

3.16%

63.94%

  Seattle market gross loans, period-end

142,104

137,830

119,095

3.10%

19.32%

  National health care gross loans, period-end (1)

216,865

203,022

155,497

6.82%

39.47%

    Total gross loans, period-end

$    1,406,012

$     1,357,045

$    1,046,011

3.61%

34.42%

DENTAL LOAN DATA (2)

  Local Dental gross loans, period-end

$       145,817

$        155,137

$       159,427

-6.01%

-8.54%

  National Dental gross loans, period-end

194,345

185,161

146,965

4.96%

32.24%

    Total gross dental loans, period-end

$       340,162

$        340,298

$       306,392

-0.04%

11.02%

(1) National health care loans include loans to health care professionals, primarily dental practitioners, operating outside of Pacific Continental Bank's market area.  The market area is defined as Oregon and Washington, West of the Cascade Mountain Range.  

(2)Dental loans include loans to dental professionals for the purpose of practice expansion, acquisition or other purpose, supported by the cash flows of a dental practice.

 

PACIFIC CONTINENTAL CORPORATION

Selected Other Financial Information and Ratios

(In thousands)

(Unaudited)

Three months ended

Twelve months ended

December 31,

September 30,

December 31,

December 31,

December 31,

2015

2015

2014

2015

2014

BALANCE SHEET AVERAGES

  Loans, net of deferred fees

$    1,374,281

$     1,335,897

$    1,028,724

$    1,270,129

$    1,025,889

  Allowance for loan losses

(16,820)

(16,275)

(15,675)

(16,142)

(15,707)

    Loans, net of allowance

1,357,461

1,319,622

1,013,049

1,253,987

1,010,182

  Securities and short-term deposits

396,852

400,428

356,389

391,888

351,975

   Earning assets

1,754,313

1,720,050

1,369,438

1,645,875

1,362,157

  Noninterest-earning assets

138,949

139,368

115,104

136,957

114,903

        Assets

$    1,893,262

$     1,859,418

$    1,484,542

$    1,782,832

$    1,477,060

  Interest-bearing core deposits(1)

$       942,360

$        944,216

$       678,381

$       887,901

$       654,965

  Noninterest-bearing core deposits(1)

584,445

538,768

404,569

518,267

376,175

    Core deposits(1)

1,526,805

1,482,984

1,082,950

1,406,168

1,031,140

  Noncore interest-bearing deposits

59,986

62,481

93,988

69,647

101,288

    Deposits

1,586,791

1,545,465

1,176,938

1,475,815

1,132,428

  Borrowings

81,872

93,211

116,567

91,700

156,765

  Other noninterest-bearing liabilities

7,501

7,512

7,580

6,817

6,105

       Liabilities

1,676,164

1,646,188

1,301,085

1,574,332

1,295,298

  Shareholders' equity (book)

217,098

213,230

183,457

208,500

181,762

       Liabilities and equity

$    1,893,262

$     1,859,418

$    1,484,542

$    1,782,832

$    1,477,060

  Shareholders' equity (tangible)(2)

$       174,051

$        170,062

$       159,947

$       168,317

$       158,206

Period-end earning assets

$    1,766,635

$     1,737,561

$    1,386,188

SELECTED MARKET DEPOSIT DATA

  Eugene market core deposits, period-end(1)

$       787,521

$        747,298

$       672,527

  Portland market core deposits, period-end(1)

552,283

549,113

276,453

  Seattle market core deposits, period-end(1)

194,138

169,136

161,881

    Total core deposits, period-end(1)

1,533,942

1,465,547

1,110,861

  Other deposits, period-end

63,151

59,407

98,232

      Total

$    1,597,093

$     1,524,954

$    1,209,093

  Eugene market core deposits, average(1)

$       783,391

$        776,755

$       668,927

  Portland market core deposits, average(1)

562,026

537,911

263,757

  Seattle market core deposits, average(1)

181,388

168,318

150,266

    Total core deposits, average(1)

1,526,805

1,482,984

1,082,950

  Other deposits, average

59,986

62,481

93,988

      Total

$    1,586,791

$     1,545,465

$    1,176,938

NET INTEREST MARGIN RECONCILIATION

  Yield on average loans (3)

5.22%

5.24%

5.27%

5.29%

5.33%

  Yield on average securities(4)

2.55%

2.52%

2.53%

2.53%

2.62%

    Yield on average earning assets(4)

4.60%

4.59%

4.56%

4.61%

4.63%

  Rate on average interest-bearing core deposits

0.26%

0.25%

0.28%

0.26%

0.29%

  Rate on average interest-bearing non-core deposits

1.30%

1.58%

1.29%

1.40%

1.35%

    Rate on average interest-bearing deposits

0.32%

0.34%

0.40%

0.35%

0.43%

  Rate on average borrowings

1.21%

1.23%

1.06%

1.22%

0.85%

    Cost of interest-bearing funds

0.39%

0.41%

0.49%

0.42%

0.50%

    Interest rate spread(4)

4.21%

4.17%

4.07%

4.19%

4.13%

       Net interest margin- fully tax equivalent yield(4)

4.36%

4.32%

4.25%

4.34%

4.30%

Acquired loan fair value accretion impact to net interest margin (5)

0.15%

0.13%

0.03%

0.14%

0.04%

(1)Core deposits include demand, interest checking, money market, savings, and local time deposits, including local nonpublic time deposits in excess of $100 thousand.  

(2)Tangible equity excludes goodwill and core deposit intangible assets related to acquisitions.

(3) Interest income includes recognized loan origination fees of $223, $152, and $149 for the three months ended December 31, 2015, September 30, 2015, and December 31, 2014,  respectively, and $702 and $574 for the twelve months ended December 31, 2015 and 2014, respectively.

(4)Tax-exempt income has been adjusted to a tax-equivalent basis at a 35% tax rate.  The tax equivalent yield adjustment to interest earned on loans was $198, $173 and $29 for the three months ended December 31, 2015, September 30, 2015, and December 31, 2014 , respectively, and $612 and $123 for the twelve months ended December 31, 2015 and 2014, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $261, $264 and $269 for the three months ended December 31, 2015, September 30, 2015, and December 31, 2014 , respectively, and $1,064 and $1,061 for the twelve months ended December 31, 2015 and 2014, respectively. 

(5)During the three months ended December 31, 2015, September 30, 2015, and December 31, 2014, accretion of the fair  value adjustment on acquired loans contributed to interest income was $671, $616, and $90, respectively, and $2,291 and $526 for the twelve months ended December 31, 2015 and 2014, respectively.

 

 

PACIFIC CONTINENTAL CORPORATION

Nonperforming Assets, Asset Quality Ratios and Allowance for Loan Losses

(Dollars in thousands)

(Unaudited)

December 31,

September 30,

December 31,

2015

2015

2014

NONPERFORMING ASSETS

Non-accrual loans

Real estate secured loans:

Permanent loans:

Multi-family residential

$                   -

$                    -

$                   -

Residential 1-4 family

733

569

321

Owner-occupied commercial

2,369

2,371

599

Nonowner-occupied commercial

790

829

906

Total permanent real estate loans

3,892

3,769

1,826

Construction loans:

Multi-family residential

-

-

-

Residential 1-4 family

53

53

-

Commercial real estate

-

-

-

Commercial bare land and acquisition & development

-

-

-

Residential bare land and acquisition & development

-

-

-

Total construction real estate loans

53

53

-

Total real estate loans

3,945

3,822

1,826

Commercial loans

1,564

983

869

Total nonaccrual loans

5,509

4,805

2,695

90-days past due and accruing interest

-

-

-

Total nonperforming loans

5,509

4,805

2,695

Nonperforming loans guaranteed by government

(2,790)

(2,574)

(706)

Net nonperforming loans

2,719

2,231

1,989

Other real estate owned

11,747

11,854

13,374

Total nonperforming assets, net of guaranteed loans

$         14,466

$          14,085

$         15,363

ASSET QUALITY RATIOS

Allowance for loan losses as a percentage of total loans outstanding

 

1.23%

1.22%

 

1.50%

Allowance for loan losses as a percentage of total nonperforming loans, net of government guarantees

636.30%

744.60%

786.17%

Quarter-to-date net loan charge offs(recoveries) as a percentage of average loans, annualized

-0.02%

0.00%

0.03%

Net nonperforming loans as a percentage of total loans

0.19%

0.16%

0.19%

Nonperforming assets as a percentage of total assets

0.76%

0.75%

1.02%

Consolidated classified asset ratio(1)

23.03%

25.14%

24.54%

Past due as a percentage of total loans(2)

0.03%

0.14%

0.15%

Three months ended

Twelve months ended

December 31,

September 30,

December 31,

December 31,

December 31,

2015

2015

2014

2015

2014

ALLOWANCE FOR LOAN LOSSES

Balance at beginning of period

$         16,612

$          16,013

$         15,722

$         15,637

$         15,917

Provision for loan losses

520

625

-

1,695

-

Loan charge-offs

(69)

(105)

(181)

(700)

(835)

Loan recoveries

238

79

96

669

555

Net recoveries (charge-offs)

169

(26)

(85)

(31)

(280)

Balance at end of period

$         17,301

$          16,612

$         15,637

$         17,301

$         15,637

(1) Consolidated classified asset ratio is defined as the sum of all loan-related contingent liabilities and loans internally graded substandard or worse, impaired loans (net of government guarantees), adversely classified securities, and other real estate owned, divided by total consolidated Tier 1 capital plus the allowance  for loan losses.

(2)Defined as loans past due more than 30 days and still accruing interest, as a percentage of total loans, net of deferred fees.

 

 

PACIFIC CONTINENTAL CORPORATION

Consolidated Financial Highlights

(Dollars in thousands, except share and per share data)

(Unaudited)

4th Quarter

3rd Quarter

2nd Quarter

1st Quarter

4th Quarter

2015

2015

2015

2015

2014

EARNINGS

Net interest income

$      18,822

$      18,308

$      17,696

$      14,972

$      14,374

Provision for loan loss

$           520

$           625

$           550

$                -

$                -

Noninterest income

$        2,008

$        1,714

$        1,627

$        1,276

$        1,318

Noninterest expense

$      11,706

$      11,182

$      11,030

$      11,972

$        9,798

Net income

$        5,528

$        5,325

$        5,095

$        2,802

$        3,631

Basic earnings per share

$          0.28

$          0.27

$          0.26

$          0.15

$          0.20

Diluted earnings per share

$          0.28

$          0.27

$          0.26

$          0.15

$          0.20

Average shares outstanding

19,598,484

19,591,666

19,562,363

18,232,076

17,717,270

Average diluted shares outstanding

19,766,098

19,816,770

19,788,884

18,444,971

17,939,752

PERFORMANCE RATIOS

Return on average assets

1.16%

1.14%

1.14%

0.72%

0.97%

Return on average equity (book)

10.10%

9.91%

9.68%

5.91%

7.85%

Return on average equity (tangible)(1)

12.60%

12.42%

12.18%

7.05%

9.01%

Net interest margin - fully tax equivalent yield (2)

4.36%

4.32%

4.39%

4.29%

4.25%

Efficiency ratio (tax equivalent) (3)

55.50%

55.12%

56.30%

72.47%

61.39%

Full-time equivalent employees

322

321

322

317

288

CAPITAL

Tier 1 leverage ratio (4)

9.93%

9.88%

10.01%

11.31%

11.33%

Common Equity tier 1 ratio(4)

10.97%

11.00%

11.27%

11.41%

NA

Tier 1 risk based ratio(4)

11.47%

11.49%

11.78%

11.97%

14.48%

Total risk based ratio(4)

12.58%

12.58%

12.88%

13.08%

15.73%

Book value per share

$        11.15

$        11.06

$        10.82

$        10.80

$        10.39

Regular cash dividend per share

$          0.11

$          0.11

$          0.10

$          0.10

$          0.10

Special cash dividend per share

 NA 

 NA 

 NA 

 NA 

$          0.05

ASSET QUALITY

Allowance for loan losses (ALL)

$      17,301

$      16,612

$      16,013

$      15,724

$      15,637

Non performing loans (NPLs) net of government guarantees

$        2,719

$        2,231

$        2,258

$        2,635

$        1,989

Non performing assets (NPAs) net of government guarantees

$      14,466

$      14,085

$      14,924

$      16,802

$      15,363

Net loan (recoveries) charge offs 

$         (169)

$             26

$           261

$           (87)

$             85

ALL as a percentage of gross loans

1.23%

1.23%

1.23%

1.25%

1.50%

ALL as a % NPLs, net of government guarantees

636.30%

744.60%

709.17%

596.74%

786.17%

Net loan charge offs (recoveries) to average loans

-0.02%

0.00%

0.05%

-0.03%

0.03%

Net NPLs as a percentage of total loans

0.19%

0.16%

0.17%

0.21%

0.19%

Nonperforming assets as a percentage of total assets

0.76%

0.75%

0.82%

0.94%

1.02%

Consolidated classified asset ratio(5)

23.03%

25.14%

26.52%

27.60%

24.54%

Past due as a percentage of total loans(6)

0.03%

0.14%

0.19%

0.35%

0.15%

END OF PERIOD BALANCES

Total securities and short term deposits

$    379,454

$    398,366

$    393,408

$    391,988

$    356,804

Total loans net of allowance

$ 1,387,181

$ 1,339,195

$ 1,288,919

$ 1,238,982

$ 1,029,384

Total earning assets

$ 1,766,635

$ 1,737,561

$ 1,682,327

$ 1,630,970

$ 1,386,188

Total assets

$ 1,909,478

$ 1,878,283

$ 1,830,942

$ 1,780,849

$ 1,504,325

Total non-interest bearing deposits

$    568,688

$    544,009

$    531,697

$    503,735

$    407,311

Core deposits(7)

$ 1,533,942

$ 1,465,547

$ 1,445,218

$ 1,417,397

$ 1,110,861

Total deposits

$ 1,597,093

$ 1,524,954

$ 1,514,181

$ 1,496,747

$ 1,209,093

AVERAGE BALANCES

Total securities and short term deposits

$    396,852

$    400,428

$    398,836

$    371,061

$    356,389

Total loans net of allowance

$ 1,357,461

$ 1,319,622

$ 1,257,366

$ 1,077,706

$ 1,013,049

Total earning assets

$ 1,754,313

$ 1,720,050

$ 1,656,202

$ 1,448,767

$ 1,369,438

Total assets

$ 1,893,262

$ 1,859,418

$ 1,800,527

$ 1,573,767

$ 1,484,542

Total non-interest bearing deposits

$    584,445

$    538,768

$    508,259

$    439,780

$    404,569

Core deposits(7)

$ 1,526,805

$ 1,482,984

$ 1,409,836

$ 1,200,618

$ 1,082,950

Total deposits

$ 1,586,791

$ 1,545,465

$ 1,483,305

$ 1,283,604

$ 1,176,938

(1) Tangible equity excludes goodwill and core deposit intangible assets related to acquisitions.

(2) Net interest margin is reported on a tax-equivalent yield basis at a 35% tax rate.

(3)Efficiency ratio is noninterest expense as a percent of net interest income (on a tax-equivalent basis) plus noninterest income.

(4)In first quarter 2015, the U.S. Basel III capital framework methodology was implemented for all banks.  The 2015 capital ratios have been presented based on the new methodology. Capital ratios prior to 2015 have not been restated in conformity with the new methodology.  

(5)The sum of all loan-related contingent liabilities and loans internally graded substandard or worse, impaired loans (net of government guarantees), adversely classified securities, and other real estate owned, divided by total consolidated Tier 1 capital plus the allowance  for loan losses.

(6)Defined as loans past due more than 30 days and still accruing interest, as a percentage of total loans, net of deferred fees.

(7)Core deposits include demand, interest checking, money market, savings, and local time deposits, including local nonpublic time deposits in excess of $100 thousand.  

NA Not applicable

 

FOR MORE INFORMATION CONTACT:

Michael Dunne

Public Information Officer

541-338-1428     

www.therightbank.com

Email: michael.dunne@therightbank.com

 

SOURCE Pacific Continental Corporation



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