Paragon Commercial Corporation Reports 23% Increase in Earnings for the First Quarter of 2016
Highlights:
- First quarter 2016 net income of $2.8 million, or 23% increase over the prior year
- Local client funding increased $110.9 million or 13% from December 31, 2015
- Net recoveries of previous charge-offs of $290,000 during the quarter
- Credit quality remains strong with nonperforming loans at only 0.05% of total loans
- Nonperforming assets decreased to 0.43% of total assets
RALEIGH, N.C., April 18, 2016 /PRNewswire/ -- Paragon Commercial Corporation (OTCQX: PBNC), parent company of Paragon Bank, today reported unaudited financial results for the quarter ended March 31, 2016. Net income during the three-month period increased 23% to $2.8 million compared to $2.3 million for the same period in 2015. This was primarily driven by an increase in net interest income as a result of continued loan growth. Fully diluted earnings per share for the same periods in 2016 and 2015 were $0.62 and $0.51, respectively. Robert C. Hatley, President and CEO stated "Our business model, excellent staff and robust markets continue to contribute to quarter over quarter increases in earnings, loan growth, efficiency and credit quality. Our significant core deposit growth in the first quarter is a key indicator that our clients really appreciate the quality banking experience they enjoy at Paragon."
The return on assets for the first quarter of 2016 was 0.86% and the return on equity was 11.46% compared to 0.77% and 10.38%, respectively, for the same ratios in the first quarter of 2015.
Consolidated Assets
Total consolidated assets on March 31, 2016 were $1.34 billion compared to $1.31 billion as of December 31, 2015. Assets increased during the quarter by $35.3 million as a result of loan demand and purchases in the investment portfolio to utilize the funds generated from core deposit growth.
Loan Portfolio
Loans outstanding increased by $28.8 million during the first quarter from $1.02 billion at December 31, 2015 to $1.04 billion at March 31, 2016. The Company continues to see strong loan growth throughout the Raleigh, Charlotte and Cary markets in line with historic seasonal trends.
Deposit Portfolio
Total deposits increased by $64.3 million during the first quarter as the Company experienced strong local funding growth while simultaneously making an effort to reduce its noncore deposits, shedding $52.1 million in internet and brokered time deposits during the period. The deposit portfolio mix continues to experience a shift from time deposits to core transactional accounts. During the quarter, demand account balances increased by $7.6 million while money market and interest checking accounts increased by $120.1 million, increases of 5% and 24%, respectively. During the same period, time deposits decreased by $63.4 million or 20% as the Company continued to implement its strategic initiative to reduce its reliance on time deposits.
Credit Quality
The Company recorded no loan loss provisions for the first quarter of 2016 due to net recoveries of past losses totaling $290,000 funding the allowance for loan losses for loan growth as well as continued credit quality improvement. The allowance for loan losses as a percentage of total loans at March 31, 2016 was 0.76%, up from 0.75% in the previous quarter. The provision for loan losses for the quarter ended March 31, 2015 was $571,000.
Nonperforming loans were 0.05% of total loans at March 31, 2016 and December 31, 2015. Loans past due 30 days or greater at quarter end were 0.01% of total loans. The ratio of total nonperforming assets to total assets including foreclosed real estate was 0.43%, down from 0.46% in the previous quarter.
Net Interest Income
Net interest income increased by $1.1 million during the first quarter of 2016 compared to 2015. Net interest income totaled $10.6 million during the period, representing a net interest margin of 3.54% on a tax equivalent basis, up 0.06% compared to the first quarter of 2015.
Non-Interest Income
For the first quarter of 2016, non-interest income was $266,000 compared to $484,000 for the same period in 2015. The first quarter of 2015 was impacted by $423,000 in securities gains compared to $85,000 for 2016.
Non-Interest Expense
Non-interest expense in the first quarter of 2016 was $6.6 million compared to $5.9 million in the first quarter of 2015. The largest increase was in personnel, which increased by $648,000 as the Company added lenders and staff through 2015 to support its strong growth.
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ABOUT PARAGON COMMERCIAL CORPORATION
Paragon Commercial Corporation is the parent company of Paragon Bank, which provides a private banking experience to businesses, professionals, executives, entrepreneurs and other individuals. Paragon's commitment to an extraordinary client experience is built on the philosophy that clients deserve well prepared bankers who are present and fully available, and proactive about helping clients achieve their goals. Founded in Raleigh, North Carolina in 1999, Paragon Bank currently has assets of $1.3 billion. Banking services are provided through highly responsive professionals, an extensive courier service, online and mobile technologies, free worldwide ATM access, and a select number of strategically placed offices in Raleigh, Cary and Charlotte, NC. For more information, visit http://ParagonBank.com.
Information in this press release contains forward-looking statements. These statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation, the effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, the risks of changes in interest rates, and the effects of competition. Paragon Commercial Corporation does not undertake a duty to update any forward-looking statements in this press release.
PARAGON COMMERCIAL CORPORATION |
|||||
CONSOLIDATED STATEMENTS OF INCOME |
|||||
(Dollars in thousands, except per share data) |
|||||
(Unaudited) |
|||||
Three Months Ended |
|||||
March 31, |
Dec. 31, |
Sept. 30, |
June 30, |
March 31, |
|
2016 |
2015 |
2015 |
2015 |
2015 |
|
Loans and loan fees |
$ 11,190 |
$ 11,311 |
$ 11,223 |
$ 10,899 |
$ 10,067 |
Investment securities |
1,219 |
1,238 |
1,249 |
1,072 |
1,227 |
Federal funds and other interest income |
58 |
45 |
38 |
40 |
26 |
Total Interest and Dividend Income |
12,467 |
12,594 |
12,510 |
12,011 |
11,320 |
Interest-bearing checking and money markets |
857 |
769 |
727 |
645 |
615 |
Time deposits |
567 |
704 |
799 |
846 |
964 |
Borrowings and repurchase agreements |
492 |
391 |
328 |
307 |
289 |
Total Interest Expense |
1,916 |
1,864 |
1,854 |
1,798 |
1,868 |
Net Interest Income |
10,551 |
10,730 |
10,656 |
10,213 |
9,452 |
Provision for loan losses |
- |
- |
- |
179 |
571 |
Net Interest Income after Provision for Loan Losses |
10,551 |
10,730 |
10,656 |
10,034 |
8,881 |
Non-interest Income |
|||||
Increase in cash surrender value of bank owned life insurance |
223 |
221 |
225 |
206 |
201 |
Net gain on sale of securities |
85 |
(26) |
145 |
- |
423 |
Deposit service charges and other fees |
58 |
56 |
58 |
54 |
51 |
Mortgage banking revenues |
32 |
41 |
44 |
75 |
37 |
Net loss on sale or write-down of other real estate |
(212) |
(287) |
(9) |
(126) |
(337) |
Other noninterest income |
80 |
97 |
81 |
115 |
109 |
Total Non-interest Income |
266 |
102 |
544 |
324 |
484 |
Non-interest Expense |
|||||
Salaries and employee benefits |
3,867 |
3,617 |
3,378 |
3,117 |
3,219 |
Occupancy |
344 |
344 |
366 |
488 |
349 |
Furniture and equipment |
492 |
495 |
482 |
451 |
450 |
Data processing |
296 |
257 |
267 |
299 |
280 |
Directors fees and expenses |
252 |
251 |
253 |
211 |
206 |
Professional fees |
237 |
123 |
159 |
318 |
137 |
FDIC and other supervisory assessments |
195 |
229 |
231 |
252 |
227 |
Advertising and public relations |
188 |
211 |
177 |
301 |
245 |
Unreimbursed loan costs and foreclosure related expenses |
69 |
124 |
281 |
298 |
171 |
Other expenses |
660 |
649 |
586 |
665 |
596 |
Total Non-interest Expenses |
6,600 |
6,300 |
6,180 |
6,400 |
5,880 |
Income before income taxes |
4,217 |
4,532 |
5,020 |
3,958 |
3,485 |
Income tax expense |
1,379 |
1,569 |
1,707 |
1,308 |
1,177 |
Net income |
$ 2,838 |
$ 2,963 |
$ 3,313 |
$ 2,650 |
$ 2,308 |
Basic earnings per share |
$ 0.62 |
$ 0.65 |
$ 0.73 |
$ 0.59 |
$ 0.52 |
Diluted earnings per share |
$ 0.62 |
$ 0.65 |
$ 0.73 |
$ 0.59 |
$ 0.51 |
PARAGON COMMERCIAL CORPORATION |
|||||
CONSOLIDATED BALANCE SHEETS |
|||||
(Dollars and shares in thousands) |
|||||
(Unaudited) |
|||||
March 31, |
Dec. 31, |
Sept. 30, |
June 30, |
March 31, |
|
2016 |
2015 |
2015 |
2015 |
2015 |
|
Assets |
|||||
Cash and due from banks |
$ 51,559 |
$ 55,530 |
$ 118,297 |
$ 77,949 |
$ 98,110 |
Investment securities - available for sale, at fair value |
182,157 |
168,896 |
172,513 |
168,048 |
154,185 |
Loans-net of unearned income and deferred fees |
1,044,981 |
1,016,156 |
998,232 |
991,445 |
944,039 |
Allowance for loan losses |
(7,931) |
(7,641) |
(7,618) |
(7,569) |
(7,553) |
1,037,050 |
1,008,515 |
990,614 |
983,876 |
936,486 |
|
Premises and equipment, net |
16,281 |
16,433 |
16,538 |
16,611 |
16,824 |
Bank owned life insurance |
28,497 |
28,274 |
28,052 |
27,827 |
27,621 |
Federal Home Loan Bank stock, at cost |
7,232 |
8,061 |
7,636 |
8,699 |
8,274 |
Accrued interest receivable |
3,858 |
3,795 |
3,609 |
3,944 |
3,530 |
Deferred tax assets |
4,304 |
4,118 |
5,141 |
5,527 |
5,004 |
Other real estate owned and reposessed property |
5,228 |
5,453 |
13,017 |
13,679 |
14,577 |
Other assets |
5,011 |
6,836 |
5,776 |
7,259 |
6,566 |
Total Assets |
$ 1,341,177 |
$ 1,305,911 |
$ 1,361,193 |
$ 1,313,419 |
$ 1,271,177 |
Liabilities and Shareholders' Equity |
|||||
Liabilities |
|||||
Deposits: |
|||||
Demand, non-interest bearing |
$ 166,556 |
$ 158,974 |
$ 161,878 |
$ 162,758 |
$ 145,799 |
Money market accounts and interest checking |
624,199 |
504,092 |
501,822 |
489,675 |
447,774 |
Time deposits |
256,378 |
319,781 |
392,080 |
372,402 |
354,512 |
Total deposits |
1,047,133 |
982,847 |
1,055,780 |
1,024,835 |
948,085 |
Repurchase agreements and federal funds purchased |
24,494 |
30,580 |
25,978 |
26,546 |
33,183 |
Borrowings |
146,673 |
169,800 |
160,422 |
146,039 |
176,650 |
Subordinated debentures |
18,558 |
18,558 |
18,558 |
18,558 |
18,558 |
Other liabilities |
4,147 |
6,468 |
6,162 |
6,297 |
4,677 |
Total Liabilities |
1,241,005 |
1,208,253 |
1,266,900 |
1,222,275 |
1,181,153 |
Stockholders' equity |
|||||
Common stock, $0.008 par value |
37 |
37 |
37 |
36 |
36 |
Additional paid in capital |
53,235 |
53,147 |
52,993 |
52,694 |
52,567 |
Retained earnings |
48,198 |
45,360 |
42,397 |
39,084 |
36,434 |
Accumulated other comprehensive (loss) income |
(1,298) |
(886) |
(1,134) |
(670) |
987 |
Total Shareholders' Equity |
100,172 |
97,658 |
94,293 |
91,144 |
90,024 |
Total Liabilities and Shareholders' Equity |
$ 1,341,177 |
$ 1,305,911 |
$ 1,361,193 |
$ 1,313,419 |
$ 1,271,177 |
PARAGON COMMERCIAL CORPORATION |
|||||
LOANS |
|||||
(In thousands except per share data) |
|||||
(Unaudited) |
|||||
March 31, |
Dec. 31, |
Sept. 30, |
June 30, |
March 31, |
|
2016 |
2015 |
2015 |
2015 |
2015 |
|
Loans |
|||||
Construction and land development |
$ 68,316 |
$ 64,704 |
$ 70,997 |
$ 72,867 |
$ 62,379 |
Commercial real estate: |
|||||
Commercial real estate |
320,791 |
305,723 |
300,696 |
303,056 |
305,179 |
Commercial real estate - owner occupied |
144,168 |
147,017 |
141,563 |
134,177 |
128,985 |
Farmland |
1,313 |
1,332 |
1,348 |
1,054 |
1,066 |
Multifamily, nonresidential and junior liens |
86,610 |
79,171 |
84,228 |
81,876 |
81,753 |
Total commercial real estate |
552,882 |
533,243 |
527,835 |
520,163 |
516,983 |
Consumer real estate: |
|||||
Home equity lines |
80,940 |
78,943 |
75,687 |
69,566 |
60,785 |
Secured by 1-4 family residential, secured by 1st deeds of trust |
171,355 |
167,709 |
164,555 |
162,370 |
152,413 |
Secured by 1-4 family residential, secured by 2nd deeds of trust |
3,731 |
3,723 |
3,642 |
3,750 |
4,815 |
Total consumer real estate |
256,026 |
250,375 |
243,884 |
235,686 |
218,013 |
Commercial and industrial loans |
153,159 |
153,669 |
138,571 |
144,420 |
132,410 |
Consumer and other |
14,598 |
14,165 |
16,945 |
18,309 |
14,254 |
Total loans |
1,044,981 |
1,016,156 |
998,232 |
991,445 |
944,039 |
PARAGON COMMERCIAL CORPORATION |
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OTHER FINANCIAL HIGHLIGHTS |
|||||
(In thousands, except per share data) |
|||||
(Unaudited) |
|||||
Three Months Ended |
|||||
March 31, |
Dec. 31, |
Sept. 30, |
June 30, |
March 31, |
|
2016 |
2015 |
2015 |
2015 |
2015 |
|
Selected Average Balances: |
|||||
Average total assets |
$ 1,323,397 |
$ 1,330,518 |
$ 1,342,111 |
$ 1,279,887 |
$ 1,202,438 |
Average earning assets |
1,235,237 |
1,239,027 |
1,240,640 |
1,196,615 |
1,119,431 |
Average loans |
1,019,396 |
1,004,627 |
999,857 |
973,610 |
902,518 |
Average total deposits |
994,219 |
1,010,610 |
1,010,398 |
937,700 |
879,350 |
Average shareholders' equity |
99,090 |
96,688 |
93,498 |
90,607 |
88,971 |
Performance Ratios: |
|||||
Return on average assets |
0.86% |
0.89% |
0.99% |
0.83% |
0.77% |
Return on average equity |
11.46% |
12.26% |
14.17% |
11.70% |
10.38% |
Tangible common equity ratio |
7.47% |
7.48% |
6.93% |
6.94% |
7.08% |
Total interest-earning assets |
$ 1,257,254 |
$ 1,224,106 |
$ 1,280,961 |
$ 1,223,755 |
$ 1,187,831 |
Tax equivalent net interest margin |
3.54% |
3.52% |
3.49% |
3.50% |
3.48% |
Overhead to average assets |
1.99% |
1.89% |
1.84% |
2.00% |
1.96% |
Efficiency ratio |
61.02% |
58.16% |
55.18% |
60.74% |
59.18% |
Credit Ratios: |
|||||
Non-accrual loans |
$ 487 |
$ 513 |
$ 738 |
$ 754 |
$ 3,935 |
Other real estate owned |
$ 5,228 |
$ 5,453 |
$ 13,017 |
$ 13,679 |
$ 14,577 |
Nonperforming assets to total assets |
0.43% |
0.46% |
1.01% |
1.10% |
1.46% |
Nonperforming loans to total loans |
0.05% |
0.05% |
0.07% |
0.08% |
0.42% |
Loans past due >30 days and still accruing |
$ 127 |
$ - |
$ - |
$ - |
$ 549 |
Net loan charge-offs (recoveries) |
$ (290) |
$ (23) |
$ (49) |
$ 162 |
$ (112) |
Annualized net charge-offs/average loans |
-0.11% |
-0.01% |
-0.02% |
0.07% |
-0.05% |
Allowance for loan losses/total loans |
0.76% |
0.75% |
0.76% |
0.76% |
0.80% |
Allowance for loan losses/nonperforming loans |
1629% |
1489% |
1032% |
1004% |
192% |
Per share data: |
|||||
Average diluted common shares outstanding |
4,574,455 |
4,567,023 |
4,565,963 |
4,528,553 |
4,514,111 |
End of quarter common shares outstanding |
4,581,334 |
4,581,334 |
4,580,434 |
4,553,141 |
4,537,595 |
Book value per common share |
$ 21.87 |
$ 21.32 |
$ 20.59 |
$ 20.02 |
$ 19.84 |
SOURCE Paragon Commercial Corporation
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