Pacific Continental Corporation Reports Second Quarter 2011 Results
EUGENE, Ore., July 20, 2011 /PRNewswire/ -- Pacific Continental Corporation (Nasdaq: PCBK), the holding company of Pacific Continental Bank, today reported financial results for the second quarter ended June 30, 2011.
Recent highlights:
- Improved net income on both a year-over-year and linked-quarter basis and the eighth consecutive quarter of improved profitability.
- Loan loss provisioning expense reduced for the eighth consecutive quarter.
- Total risk-based capital ratio of 18.67%, significantly above the 10.0% minimum for "well-capitalized" designation.
- Recognized by Oregon Ethics in Business, which honors Oregon-based organizations who have demonstrated ethical business practices, as a finalist in 2011.
- Recognized by Seattle Business magazine as one of Washington's "100 Best Companies to Work For" and the highest-rated bank in its size category.
Net income for the second quarter 2011 was $2.2 million, up 31% over net income of $1.6 million for the second quarter 2010; and on a linked-quarter basis, net income was up $708 thousand from the first quarter 2011. Earnings per diluted share were $0.12 for the second quarter 2011, compared to $0.09 and $0.08 for the second quarter 2010 and first quarter 2011, respectively.
"It is encouraging to see that our many initiatives are resulting in improved profitability," said Hal Brown, chief executive officer. "I am particularly pleased with the growth in our commercial loan portfolio which demonstrates our commitment to meet the credit needs of community businesses; this growth, together with our many banker activities, suggests continued performance improvement in the quarters to come," added Brown.
Classified assets, provisioning and loan statistics
Classified assets continued a four-quarter trend of decline, and at June 30, 2011, totaled $92.5 million, a decrease of $31.9 million from a year ago and a decline of $17.3 million from December 31, 2010. Nonperforming assets, a subcategory of classified assets, totaled $56.5 million at June 30, 2011, or 4.6% of total assets, an increase of $12.4 million for the quarter. The increase was primarily attributable to a single commercial development loan that, although previously classified during the third quarter 2010, was moved to nonaccrual status during the current quarter without any required impairment. Subsequent to the end of second quarter 2011, the Company had additional reductions in classified assets of $7.2 million, including the $5.8 million sale of its single largest property in other real estate owned with a small gain recorded on the sale.
"We are quite pleased with the continued progress in reducing the level of classified and problem assets," said Roger Busse, president and chief operating officer. "In addition to the subsequent quarter-end sale of property, we have a number of other pending sales and resolutions that should accelerate our progress during the remainder of this year," added Busse.
Loans past-due 30-89 days (excluding nonaccrual loans) were 0.51% of total loans at June 30, 2011; and for the eighth consecutive quarter were near or below one percent, a ratio that suggests credit stabilization.
The Company's second quarter 2011 provision for loan losses was $2.0 million, down from $3.8 million a year ago and $2.2 million in the first quarter 2011. While the provision remains elevated when compared to pre-recession periods, it has been trending down over the past eight quarters. During the second quarter of 2011, the Company recognized net loan charge-offs of $1.9 million, down from the $3.5 million recorded in the first quarter 2011. The allowance for loan losses as a percentage of outstanding loans at June 30, 2011, was 1.85%, compared to 1.93% and 1.98% at December 31, 2010, and June 30, 2010, respectively.
Core deposit growth continues and commercial loan activity strengthens
During the second quarter 2011, the Company continued to experience growth in its company-defined core deposit base. Outstanding core deposits and quarterly average core deposit figures, a measure which reduces daily deposit volatility, showed increases of $18.2 million and $4.5 million, respectively over first quarter 2011. Second quarter 2011 average core deposits were up $70.2 million or 8.7% over second quarter 2010.
Outstanding commercial loans have increased $8.2 million or 3.4% during the first six months of 2011 and are up $14.8 million or 6.3% over outstanding loans at June 30, 2010. This growth continues to validate the Company's business model and focused strategy on meeting the credit needs of community-based businesses, nonprofit organizations, health care professionals and professional service providers. However, weak real estate markets in the Northwest and the planned contraction in the real estate portfolio led to a net decline in period-end gross loans. Outstanding loans at June 30, 2011, were $830.4 million, down $12.0 million from the end of first quarter 2011 and down $73.6 million from that of a year ago. Contraction in the Company's real estate loan portfolio continued during the second quarter 2011 declining $8.7 million from the end of first quarter 2011 and has declined $86.4 million over the past year.
Capital levels
The Company's capital ratios continue to be well above the minimum FDIC well-capitalized designated levels. At June 30, 2011, the Company's Tier 1 leverage ratio, Tier 1 risk-based capital ratio, and Total risk-based capital ratio were 13.49%, 17.41% and 18.67% as compared to 13.38%, 15.86% and 17.10% at December 31, 2010. The FDIC's minimum well-capitalized designation ratios are 5.00%, 6.00% and 10.00%, respectively.
Net interest margin
The net interest margin for the current quarter was 4.58%, down 12 basis points from the 4.70% margin reported for first quarter 2011, and down 17 basis points from the 4.75% margin reported for second quarter 2010. The net interest margin for the current period and all prior periods has been adjusted to a tax-equivalent basis using a 35% tax rate. The linked-quarter decline in the net interest margin was primarily attributable to an increase in interest reversed on loans placed on nonaccrual status during the current quarter of $287 thousand which negatively impacted the net interest margin by 10 basis points.
The sustained growth in core deposits together with the net contraction in the loan portfolio continued to result in additions to the securities portfolio. The securities portfolio grew by $36.8 million during the second quarter 2011, and at June 30, 2011, represented 25% of total assets versus just 16% of total assets one year ago. This increase in the securities portfolio, which has significantly lower yields than loans, also contributes to the decline in the net interest margin. Loan pipelines in all three markets are increasing suggesting future growth in the loan portfolio and an improvement in the net interest margin.
Noninterest income and expense
Noninterest income in second quarter 2011 was up $743 thousand over the same quarter last year. Most of this increase was attributable to $474 thousand in gains on the sale of securities recorded during second quarter 2011 combined with the fact that second quarter 2010 noninterest income was reduced by $226 thousand due to an other-than-temporary-impairment charge related to a portion of the Company's securities portfolio. Merchant bankcard fees continued to show strong year-over-year growth as evidenced by the 14% increase in this category. The increase in bankcard fees is reflective of both improving volumes and increased margins. On a linked-quarter basis and excluding gains or losses on the sale of securities, second quarter 2011 noninterest income showed a slight improvement over first quarter 2011, most of which was attributable to increases in merchant bankcard revenues.
Noninterest expense in second quarter 2011 was up $1.1 million over second quarter 2010. This increase was primarily attributable to increased personnel expense and other real estate expenses. Personnel expense increased $585 thousand primarily due to staff additions to line units that will poise the Company for growth in future quarters. Other real estate expenses totaled $457 thousand during the second quarter 2011 compared to $12 thousand during the second quarter 2010. On a linked-quarter basis, second quarter 2011 noninterest expense was down $327 thousand from first quarter 2011. This decrease was primarily due to declines in FDIC assessments as new assessment methodology was implemented in second quarter 2011 and a reduction in other real estate expense, specifically valuation write-downs.
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 second quarter 2011 on Thursday, July 21, 2011, at 11:00 a.m. Pacific Time / 2:00 p.m. Eastern Time. To listen to the conference call, interested parties should call (866) 292-1418. The webcast will be available via Pacific Continental's website (http://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 Maecey Castle, vice president and director of corporate communications, at (541) 686-8685.
About Pacific Continental Bank
Pacific Continental Bank, the operating subsidiary of Pacific Continental Corporation, delivers highly personalized services through fourteen banking offices in Oregon and Washington. The Bank also operates a loan production office in Tacoma, Washington. Pacific Continental, with $1.2 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 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"). Such forward-looking statements include but are not limited to statements about suggested future profitability, loan growth, and increasing net interest margin, and are subject to risks and uncertainties that may cause actual results to differ materially from those projected, including but not limited to the following: the high concentration of loans of the company's banking subsidiary in commercial and residential real estate lending; adverse economic trends in the United States and the markets we serve affecting the Bank's borrower base; a continued decline in the housing and real estate market; a continued increase in unemployment or sustained high levels of unemployment; continued erosion or sustained low levels of consumer confidence; changes in 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; increased competition among financial institutions; fluctuating interest rate environments; a tightening of available credit and other risks and uncertainties discussed in the sections titled "Risk Factors", "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations", as applicable, from Pacific Continental's most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. Readers are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date on which they are made and reflect management's current estimates, projections, expectations and beliefs. Pacific Continental Corporation undertakes no obligation to publicly revise or update the forward-looking statements to reflect events or circumstances that arise after the date of this release. This statement is included for the express purpose of invoking PSLRA's safe harbor provisions.
PACIFIC CONTINENTAL CORPORATION | |||||||||
Consolidated Income Statements | |||||||||
(In thousands, except share and per share amounts) | |||||||||
(Unaudited) | |||||||||
Three months ended | Six months ended | ||||||||
June 30, | June 30, | June 30, | June 30, | ||||||
2011 | 2010 | 2011 | 2010 | ||||||
Interest and dividend income | |||||||||
Loans | $ 12,564 | $ 14,498 | $ 25,563 | $ 29,162 | |||||
Securities | 2,254 | 1,403 | 4,295 | 2,954 | |||||
Federal funds sold & interest-bearing deposits with banks | 2 | 1 | 4 | 3 | |||||
14,820 | 15,902 | 29,862 | 32,119 | ||||||
Interest expense | |||||||||
Deposits | 1,771 | 2,341 | 3,697 | 4,673 | |||||
Federal Home Loan Bank & Federal Reserve borrowings | 462 | 589 | 954 | 1,224 | |||||
Junior subordinated debentures | 34 | 131 | 65 | 260 | |||||
Federal funds purchased | 11 | 14 | 22 | 25 | |||||
2,278 | 3,075 | 4,738 | 6,182 | ||||||
Net interest income | 12,542 | 12,827 | 25,124 | 25,937 | |||||
Provision for loan losses | 2,000 | 3,750 | 4,150 | 8,000 | |||||
Net interest income after provision for loan losses | 10,542 | 9,077 | 20,974 | 17,937 | |||||
Noninterest income | |||||||||
Service charges on deposit accounts | 436 | 418 | 866 | 828 | |||||
Other fee income, principally bankcard | 418 | 367 | 805 | 693 | |||||
Loan servicing fees | 27 | 15 | 55 | 32 | |||||
Mortgage banking income | 32 | 40 | 74 | 75 | |||||
Gain on sale of investment securities | 474 | 45 | 465 | 45 | |||||
Impairment losses on investment securities (OTTI) | - | (226) | - | (226) | |||||
Other noninterest income | 278 | 263 | 549 | 520 | |||||
1,665 | 922 | 2,814 | 1,967 | ||||||
Noninterest expense | |||||||||
Salaries and employee benefits | 4,779 | 4,194 | 9,446 | 8,983 | |||||
Premises and equipment | 886 | 828 | 1,744 | 1,671 | |||||
Bankcard processing | 161 | 157 | 318 | 294 | |||||
Business development | 400 | 390 | 782 | 705 | |||||
FDIC insurance assessment | 378 | 512 | 887 | 985 | |||||
Other real estate expense | 457 | 12 | 1,411 | 101 | |||||
Other noninterest expense | 1,957 | 1,808 | 3,774 | 3,376 | |||||
9,018 | 7,901 | 18,362 | 16,115 | ||||||
Income before provision for income taxes | 3,189 | 2,098 | 5,426 | 3,789 | |||||
Provision for income taxes | 1,032 | 452 | 1,820 | 1,040 | |||||
Net income | $ 2,157 | $ 1,646 | $ 3,606 | $ 2,749 | |||||
Earnings per share: | |||||||||
Basic | $ 0.12 | $ 0.09 | $ 0.20 | $ 0.15 | |||||
Diluted | $ 0.12 | $ 0.09 | $ 0.20 | $ 0.15 | |||||
Weighted average shares outstanding: | |||||||||
Basic | 18,426,894 | 18,397,691 | 18,421,410 | 18,395,743 | |||||
Common stock equivalents | |||||||||
attributable to stock-based awards | 29,687 | 22,109 | 33,427 | 21,547 | |||||
Diluted | 18,456,581 | 18,419,800 | 18,454,837 | 18,417,290 | |||||
PERFORMANCE RATIOS | |||||||||
Return on average assets | 0.71% | 0.56% | 0.60% | 0.47% | |||||
Return on average equity (book) | 4.93% | 3.85% | 4.17% | 3.27% | |||||
Return on average equity (tangible) (1) | 5.65% | 4.43% | 4.79% | 3.77% | |||||
Net interest margin (2) | 4.58% | 4.75% | 4.64% | 4.80% | |||||
Efficiency ratio (3) | 63.48% | 57.47% | 65.72% | 57.75% | |||||
(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 divided by operating revenues. Operating revenues are net interest income plus noninterest income. | |||||||||
PACIFIC CONTINENTAL CORPORATION | |||||||
Consolidated Balance Sheets | |||||||
(In thousands, except share amounts) | |||||||
(Unaudited) | |||||||
June 30, | December 31, | June 30, | |||||
2011 | 2010 | 2010 | |||||
ASSETS | |||||||
Cash and due from banks | $ 21,190 | $ 25,424 | $ 16,908 | ||||
Interest-bearing deposits with banks | 167 | 267 | 967 | ||||
Total cash and cash equivalents | 21,357 | 25,691 | 17,875 | ||||
Securities available-for-sale | 307,533 | 253,907 | 188,193 | ||||
Loans held-for-sale | 653 | 2,116 | 1,090 | ||||
Loans, less allowance for loan losses and net deferred fees | 814,397 | 839,815 | 885,223 | ||||
Interest receivable | 4,406 | 4,371 | 4,212 | ||||
Federal Home Loan Bank stock | 10,652 | 10,652 | 10,652 | ||||
Property and equipment, net of accumulated depreciation | 20,625 | 20,883 | 21,275 | ||||
Goodwill and intangible assets | 22,346 | 22,458 | 22,569 | ||||
Deferred tax asset | 8,714 | 10,188 | 5,465 | ||||
Taxes receivable | - | - | 2,344 | ||||
Other real estate owned | 12,312 | 14,293 | 9,651 | ||||
Prepaid FDIC assessment | 3,534 | 4,387 | 5,339 | ||||
Other assets | 1,845 | 1,415 | 1,532 | ||||
Total assets | $ 1,228,374 | $ 1,210,176 | $ 1,175,420 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Deposits | |||||||
Noninterest-bearing demand | $ 257,570 | $ 234,331 | $ 238,436 | ||||
Savings and interest-bearing checking | 555,987 | 574,333 | 510,334 | ||||
Time $100,000 and over | 73,171 | 63,504 | 65,030 | ||||
Other time | 75,640 | 86,791 | 95,753 | ||||
Total deposits | 962,368 | 958,959 | 909,553 | ||||
Federal funds and overnight funds purchased | 18,000 | - | 13,885 | ||||
Federal Home Loan Bank borrowings | 59,500 | 67,000 | 70,500 | ||||
Junior subordinated debentures | 8,248 | 8,248 | 8,248 | ||||
Accrued interest and other payables | 2,832 | 3,731 | 2,476 | ||||
Total liabilities | 1,050,948 | 1,037,938 | 1,004,662 | ||||
Shareholders' equity | |||||||
Common stock, shares authorized: 50,000,000 | |||||||
shares issued and outstanding: 18,433,084 at | |||||||
June 30, 2011, 18,415,132 at December 31, 2010, | |||||||
and 18,398,725 at June 30, 2010 | 137,491 | 137,062 | 136,646 | ||||
Retained earnings | 37,206 | 33,969 | 31,994 | ||||
Accumulated other comprehensive income | 2,729 | 1,207 | 2,118 | ||||
177,426 | 172,238 | 170,758 | |||||
Total liabilities and shareholders’ equity | $ 1,228,374 | $ 1,210,176 | $ 1,175,420 | ||||
CAPITAL RATIOS | |||||||
Total capital (to risk weighted assets) | 18.67% | 17.10% | 17.01% | ||||
Tier I capital (to risk weighted assets) | 17.41% | 15.86% | 15.75% | ||||
Tier I capital (to leverage assets) | 13.49% | 13.38% | 13.21% | ||||
Tangible common equity (to tangible assets)(1) | 12.86% | 12.61% | 12.85% | ||||
Tangible common equity (to risk-weighted assets)(1) | 16.84% | 15.18% | 15.15% | ||||
OTHER FINANCIAL DATA | |||||||
Shares outstanding at end of period | 18,433,084 | 18,415,132 | 18,398,725 | ||||
Tangible shareholders' equity(1) | $ 155,080 | $ 149,780 | $ 148,189 | ||||
Book value per share | $ 9.63 | $ 9.35 | $ 9.28 | ||||
Tangible book value per share | $ 8.41 | $ 8.13 | $ 8.05 | ||||
(1)Tangible shareholders' equity excludes goodwill and core deposit intangible assets related to acquisitions. | |||||||
PACIFIC CONTINENTAL CORPORATION | |||||||
Loans by Type and Allowance for Loan Losses | |||||||
(In thousands) | |||||||
(Unaudited) | |||||||
June 30, | December 31, | June 30, | |||||
2011 | 2010 | 2010 | |||||
LOANS BY TYPE | |||||||
Real estate secured loans: | |||||||
Permanent loans: | |||||||
Multifamily residential | $ 48,013 | $ 57,850 | $ 59,150 | ||||
Residential 1-4 family | 70,039 | 76,692 | 87,881 | ||||
Owner-occupied commercial | 205,612 | 201,286 | 205,126 | ||||
Non-owner-occupied commercial | 155,786 | 163,071 | 152,422 | ||||
Other loans secured by real estate | 18,755 | 23,950 | 27,064 | ||||
Total permanent real estate loans | 498,205 | 522,849 | 531,643 | ||||
Construction loans: | |||||||
Multifamily residential | 1,391 | 6,192 | 14,180 | ||||
Residential 1-4 family | 20,823 | 22,683 | 30,329 | ||||
Commercial real estate | 12,580 | 11,730 | 30,656 | ||||
Commercial bare land and acquisition & development | 25,049 | 25,587 | 24,804 | ||||
Residential bare land and acquisition & development | 13,680 | 17,263 | 26,477 | ||||
Total construction real estate loans | 73,523 | 83,455 | 126,446 | ||||
Total real estate loans | 571,728 | 606,304 | 658,089 | ||||
Commercial loans | 251,188 | 243,034 | 236,351 | ||||
Consumer loans | 5,840 | 5,900 | 7,283 | ||||
Other loans | 1,599 | 1,730 | 2,187 | ||||
Gross loans | 830,355 | 856,968 | 903,910 | ||||
Deferred loan origination fees | (632) | (583) | (833) | ||||
829,723 | 856,385 | 903,077 | |||||
Allowance for loan losses | (15,326) | (16,570) | (17,854) | ||||
$ 814,397 | $ 839,815 | $ 885,223 | |||||
Real estate loans held-for-sale | $ 653 | $ 2,116 | $ 1,090 | ||||
Three months ended | Six months ended | ||||||||
June 30, | June 30, | June 30, | June 30, | ||||||
ALLOWANCE FOR LOAN LOSSES | 2011 | 2010 | 2011 | 2010 | |||||
Balance at beginning of period | $ 15,227 | $ 14,857 | $ 16,570 | $ 13,367 | |||||
Provision for loan losses | 2,000 | 3,750 | 4,150 | 8,000 | |||||
Loan charge offs | (2,263) | (1,038) | (5,877) | (5,949) | |||||
Loan recoveries | 362 | 285 | 483 | 2,436 | |||||
Net charge offs | (1,901) | (753) | (5,394) | (3,513) | |||||
Balance at end of period | $ 15,326 | $ 17,854 | $ 15,326 | $ 17,854 | |||||
PACIFIC CONTINENTAL CORPORATION | |||||||||
Selected Other Financial Information and Ratios | |||||||||
(In thousands) | |||||||||
(Unaudited) | |||||||||
Three months ended | Six months ended | ||||||||
June 30, | June 30, | June 30, | June 30, | ||||||
2011 | 2010 | 2011 | 2010 | ||||||
BALANCE SHEET AVERAGES | |||||||||
Loans(1) | $ 834,071 | $ 916,289 | $ 842,393 | $ 927,510 | |||||
Allowance for loan losses | (15,307) | (16,412) | (16,243) | (16,093) | |||||
Loans, net of allowance | 818,764 | 899,877 | 826,150 | 911,417 | |||||
Securities and short-term deposits | 290,556 | 186,088 | 275,996 | 179,719 | |||||
Earning assets | 1,109,320 | 1,085,965 | 1,102,146 | 1,091,136 | |||||
Non-interest-earning assets | 103,860 | 102,919 | 105,105 | 97,826 | |||||
Assets | $ 1,213,180 | $ 1,188,884 | $ 1,207,251 | $ 1,188,962 | |||||
Interest-bearing core deposits(2) | $ 623,403 | $ 591,037 | $ 626,846 | $ 587,455 | |||||
Non-interest-bearing core deposits(2) | 258,326 | 220,505 | 252,636 | 207,647 | |||||
Core deposits(2) | 881,729 | 811,542 | 879,482 | 795,102 | |||||
Non-core interest-bearing deposits | 62,687 | 85,442 | 57,727 | 85,980 | |||||
Deposits | 944,416 | 896,984 | 937,209 | 881,082 | |||||
Borrowings | 90,470 | 117,022 | 92,641 | 137,058 | |||||
Other non-interest-bearing liabilities | 2,829 | 3,298 | 3,174 | 1,212 | |||||
Liabilities | 1,037,715 | 1,017,304 | 1,033,024 | 1,019,352 | |||||
Shareholders' equity (book) | 175,465 | 171,580 | 174,227 | 169,610 | |||||
Liabilities and equity | $ 1,213,180 | $ 1,188,884 | $ 1,207,251 | $ 1,188,962 | |||||
Shareholders' equity (tangible)(3) | $ 153,088 | $ 148,981 | $ 151,823 | $ 146,982 | |||||
SELECTED MARKET DATA | |||||||||
Eugene market loans, net of fees, period end | $ 252,271 | $ 265,211 | |||||||
Portland market loans, net of fees, period end | 399,682 | 413,844 | |||||||
Seattle market loans, net of fees, period end | 177,770 | 224,022 | |||||||
Total loans, net of fees, period end | $ 829,723 | $ 903,077 | |||||||
Eugene market core deposits, period end(2) | $ 530,662 | $ 532,813 | |||||||
Portland market core deposits, period end(2) | 234,499 | 187,423 | |||||||
Seattle market core deposits, period end(2) | 126,827 | 121,377 | |||||||
Total core deposits, period end(2) | 891,988 | 841,613 | |||||||
Other deposits, period end | 70,380 | 67,940 | |||||||
Total | $ 962,368 | $ 909,553 | |||||||
Eugene market core deposits, average(2) | $ 508,571 | $ 509,175 | |||||||
Portland market core deposits, average(2) | 250,985 | 185,189 | |||||||
Seattle market core deposits, average(2) | 122,173 | 117,178 | |||||||
Total core deposits, average(2) | 881,729 | 811,542 | |||||||
Other deposits, average | 62,687 | 85,442 | |||||||
Total | $ 944,416 | $ 896,984 | |||||||
NET INTEREST MARGIN RECONCILIATION | |||||||||
Yield on average loans | 6.15% | 6.46% | 6.24% | 6.45% | |||||
Yield on average securities(4) | 3.28% | 3.08% | 3.31% | 3.38% | |||||
Yield on average earning assets(4) | 5.40% | 5.88% | 5.50% | 5.95% | |||||
Rate on average interest-bearing core deposits | 0.96% | 1.35% | 1.02% | 1.36% | |||||
Rate on average interest-bearing non-core deposits | 1.74% | 1.66% | 1.80% | 1.69% | |||||
Rate on average interest-bearing deposits | 1.04% | 1.39% | 1.09% | 1.40% | |||||
Rate on average borrowings | 2.25% | 2.52% | 2.27% | 2.22% | |||||
Cost of interest-bearing funds | 1.18% | 1.55% | 1.23% | 1.54% | |||||
Interest rate spread(4) | 4.23% | 4.33% | 4.28% | 4.41% | |||||
Net interest margin(4) | 4.58% | 4.75% | 4.64% | 4.80% | |||||
(1)Includes loans held-for sale. | |||||||||
(2)Core deposits include all demand, savings, and interest checking accounts plus all local time deposits including local time deposits in excess of $100,000. | |||||||||
(3)Tangible equity excludes goodwill and core deposit intangible assets related to acquisitions. | |||||||||
(4)Tax-exempt income has been adjusted to a tax-equivalent basis at a 35% tax rate. The amount of such adjustment was an addition to recorded income of approximately $120 thousand and $25 thousand for the three months ended June 30, 2011 and 2010, respectively and $224 thousand and $33 thousand for the six months ended June 30. 2011 and 2010, respectively. | |||||||||
PACIFIC CONTINENTAL CORPORATION Nonperforming Assets and Loan Quality Ratios (In thousands) (Unaudited) | ||||||||||||
June 30, | December 31, | June 30, | ||||||||||
2011 | 2010 | 2010 | ||||||||||
NONPERFORMING ASSETS | ||||||||||||
Non-accrual loans | ||||||||||||
Real estate secured loans: | ||||||||||||
Permanent loans: | ||||||||||||
Multifamily residential | $ - | $ 1,010 | $ 5,577 | |||||||||
Residential 1-4 family | 8,177 | 6,123 | 3,762 | |||||||||
Owner-occupied commercial | 3,575 | 1,622 | 3,213 | |||||||||
Non-owner-occupied commercial | 7,827 | 8,428 | 1,258 | |||||||||
Other loans secured by real estate | 922 | 538 | 1,051 | |||||||||
Total permanent real estate loans | 20,501 | 17,721 | 14,861 | |||||||||
Construction loans: | ||||||||||||
Multifamily residential | - | 1,985 | 441 | |||||||||
Residential 1-4 family | 1,699 | 2,493 | 3,563 | |||||||||
Commercial real estate | 1,500 | 1,671 | 3,491 | |||||||||
Commercial bare land and acquisition & development | 13,027 | 91 | 673 | |||||||||
Residential bare land and acquisition & development | 1,597 | 1,032 | 7,037 | |||||||||
Other | - | - | - | |||||||||
Total construction real estate loans | 17,823 | 7,272 | 15,205 | |||||||||
Total real estate loans | 38,324 | 24,993 | 30,066 | |||||||||
Commercial loans | 6,515 | 8,033 | 9,825 | |||||||||
Consumer loans | - | - | - | |||||||||
Other loans | - | - | - | |||||||||
Total nonaccrual loans | 44,839 | 33,026 | 39,891 | |||||||||
90 days past due and accruing interest | - | - | - | |||||||||
Total nonperforming loans | 44,839 | 33,026 | 39,891 | |||||||||
Nonperforming loans guaranteed by government | (666) | (1,056) | (621) | |||||||||
Net nonperforming loans | 44,173 | 31,970 | 39,270 | |||||||||
Other real estate owned | 12,312 | 14,293 | 9,651 | |||||||||
Total nonperforming assets, net of guaranteed loans | $ 56,485 | $ 46,263 | $ 48,921 | |||||||||
LOAN QUALITY RATIOS | ||||||||||||
Allowance for loan losses as a percentage of total loans outstanding | 1.85% | 1.93% | 1.98% | |||||||||
Allowance for loan losses as a percentage of total nonperforming loans, net of government guarantees | 34.70% | 51.83% | 45.46% | |||||||||
Net loan charge offs (recoveries) as a percentage of average loans, annualized | 1.29% | 1.30% | 0.76% | |||||||||
Net nonperforming loans as a percentage of total loans | 5.32% | 3.73% | 4.35% | |||||||||
Nonperforming assets as a percentage of total assets | 4.60% | 3.82% | 4.16% | |||||||||
Consolidated classified asset ratio(1) | 52.63% | 63.39% | 72.31% | |||||||||
Past due (excluding nonaccrual) as a percentage of total loans | 0.51% | 0.77% | 0.48% | |||||||||
(1)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. | ||||||||||||
PACIFIC CONTINENTAL CORPORATION | ||||||||||||||||||||
Nonperforming Loan Rollforward | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Balance at | Additions to | Net | Returns to | Transfers | Balance at | |||||||||||||||
March 31, 2011 | Non-performing | Reclassification | Paydowns | Performing | Charge-offs | to OREO | June 30, 2011 | |||||||||||||
Real estate loans | ||||||||||||||||||||
Multifamily residential | $ 64 | $ 250 | $ - | $ (314) | $ - | $ - | $ - | $ - | ||||||||||||
Residential 1-4 family | 6,503 | 2,318 | - | (217) | - | (164) | (263) | 8,177 | ||||||||||||
Owner-occupied commercial | 1,959 | 2,309 | - | (382) | - | (11) | (300) | 3,575 | ||||||||||||
Non owner-occupied commercial | 8,215 | - | - | (62) | - | (326) | - | 7,827 | ||||||||||||
Other real estate loans | 1,407 | 14 | (499) | - | - | - | - | 922 | ||||||||||||
Total real estate loans | 18,148 | 4,891 | (499) | (975) | - | (501) | (563) | 20,501 | ||||||||||||
Construction | ||||||||||||||||||||
Multifamily residential | 232 | - | - | (232) | - | - | - | - | ||||||||||||
Residential 1-4 family | 1,972 | 361 | - | (410) | - | (224) | - | 1,699 | ||||||||||||
Commercial real estate | 1,500 | - | - | - | - | - | - | 1,500 | ||||||||||||
Commercial bare land and acquisition & development | - | 13,027 | - | - | - | - | - | 13,027 | ||||||||||||
Residential bare land and acquisition & development | 2,024 | - | - | (125) | - | (302) | - | 1,597 | ||||||||||||
Total construction loans | 5,728 | 13,388 | - | (767) | - | (526) | - | 17,823 | ||||||||||||
Commercial and other | 7,275 | 350 | 499 | (1,097) | (461) | (51) | - | 6,515 | ||||||||||||
Consumer | - | - | - | - | - | - | - | - | ||||||||||||
Total | $ 31,151 | $ 18,629 | $ - | $ (2,839) | $ (461) | $ (1,078) | $ (563) | $ 44,839 | ||||||||||||
Balance at | Additions to | Net | Returns to | Transfers | Balance at | |||||||||||||||
December 31, 2010 | Non-performing | Reclassification | Paydowns | Performing | Charge-offs | to OREO | June 30, 2011 | |||||||||||||
Real estate loans | ||||||||||||||||||||
Multifamily residential | $ 1,010 | $ 250 | $ - | $ (1,186) | $ - | $ (74) | $ - | $ - | ||||||||||||
Residential 1-4 family | 6,123 | 3,985 | - | (450) | - | (956) | (525) | 8,177 | ||||||||||||
Owner-occupied commercial | 1,622 | 2,665 | - | (387) | - | (25) | (300) | 3,575 | ||||||||||||
Non owner-occupied commercial | 8,428 | - | - | (138) | - | (463) | - | 7,827 | ||||||||||||
Other real estate loans | 538 | 1,232 | (499) | (39) | - | (310) | - | 922 | ||||||||||||
Total real estate loans | 17,721 | 8,132 | (499) | (2,200) | - | (1,828) | (825) | 20,501 | ||||||||||||
Construction | ||||||||||||||||||||
Multifamily residential | 1,985 | - | - | (1,985) | - | - | - | - | ||||||||||||
Residential 1-4 family | 2,493 | 414 | - | (724) | - | (421) | (63) | 1,699 | ||||||||||||
Commercial real estate | 1,671 | - | - | - | - | (171) | - | 1,500 | ||||||||||||
Commercial bare land and acquisition & development | 91 | 13,027 | - | - | - | (91) | - | 13,027 | ||||||||||||
Residential bare land and acquisition & development | 1,032 | 2,250 | - | (144) | - | (1,505) | (36) | 1,597 | ||||||||||||
Total construction loans | 7,272 | 15,691 | - | (2,853) | - | (2,188) | (99) | 17,823 | ||||||||||||
Commercial and other | 8,033 | 600 | 499 | (1,490) | (461) | (666) | - | 6,515 | ||||||||||||
Consumer | - | 10 | - | - | - | (10) | - | - | ||||||||||||
Total | $ 33,026 | $ 24,433 | $ - | $ (6,543) | $ (461) | $ (4,692) | $ (924) | $ 44,839 | ||||||||||||
PACIFIC CONTINENTAL CORPORATION | ||||||||||||||||
Other Real Estate Owned Rollforward | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Balance at | Additions to | Capitalized | Paydowns/ | Writedowns/ | Balance at | |||||||||||
March 31, 2011 | REO | Costs | Sales | Loss/Gain | June 30, 2011 | |||||||||||
Real estate | ||||||||||||||||
Multifamily residential | $ - | $ - | $ - | $ - | $ - | - | ||||||||||
Residential 1-4 family | 1,624 | 263 | - | (662) | (24) | 1,201 | ||||||||||
Owner-occupied commercial | - | 300 | - | - | - | 300 | ||||||||||
Non owner-occupied commercial | - | - | - | - | - | - | ||||||||||
Other real estate loans | - | - | - | - | - | - | ||||||||||
Total real estate loans | 1,624 | 563 | - | (662) | (24) | 1,501 | ||||||||||
Construction | ||||||||||||||||
Multifamily residential | - | - | - | - | - | - | ||||||||||
Residential 1-4 family | 1,082 | - | - | (939) | (80) | 63 | ||||||||||
Commercial real estate | 3,818 | - | - | - | - | 3,818 | ||||||||||
Commercial bare land and acquisition & development | 1,013 | - | - | - | (185) | 828 | ||||||||||
Residential bare land and acquisition & development | 6,165 | - | - | - | (63) | 6,102 | ||||||||||
Total construction loans | 12,078 | - | - | (939) | (328) | 10,811 | ||||||||||
Commercial and other | 38 | - | - | (44) | 6 | - | ||||||||||
Consumer | - | - | - | - | - | - | ||||||||||
Total | $ 13,740 | $ 563 | $ - | $ (1,645) | $ (346) | $ 12,312 | ||||||||||
Balance at | Additions to | Capitalized | Paydowns/ | Writedowns/ | Balance at | |||||||||||
December 31, 2010 | REO | Costs | Sales | Loss/Gain | June 30, 2011 | |||||||||||
Real estate | ||||||||||||||||
Multifamily residential | $ - | $ - | $ - | $ - | $ - | - | ||||||||||
Residential 1-4 family | 1,374 | 525 | - | (662) | (36) | 1,201 | ||||||||||
Owner-occupied commercial | - | 300 | - | - | - | 300 | ||||||||||
Non owner-occupied commercial | - | - | - | - | - | - | ||||||||||
Other real estate loans | - | - | - | - | - | - | ||||||||||
Total real estate loans | 1,374 | 825 | - | (662) | (36) | 1,501 | ||||||||||
Construction | ||||||||||||||||
Multifamily residential | - | - | - | - | - | - | ||||||||||
Residential 1-4 family | 1,178 | 63 | - | (953) | (225) | 63 | ||||||||||
Commercial real estate | 4,389 | - | - | - | (571) | 3,818 | ||||||||||
Commercial bare land and acquisition & development | 1,013 | - | - | - | (185) | 828 | ||||||||||
Residential bare land and acquisition & development | 6,301 | 36 | - | - | (235) | 6,102 | ||||||||||
Total construction loans | 12,881 | 99 | - | (953) | (1,216) | 10,811 | ||||||||||
Commercial and other | 38 | - | - | (44) | 6 | - | ||||||||||
Consumer | - | - | - | - | - | - | ||||||||||
Total | $ 14,293 | $ 924 | $ - | $ (1,659) | $ (1,246) | $ 12,312 | ||||||||||
PACIFIC CONTINENTAL CORPORATION | |||||||||||||||||
Age Analysis of Past Due Financing Receivables (Unaudited) | |||||||||||||||||
(In thousands) | |||||||||||||||||
As of June 30, 2011 | |||||||||||||||||
Greater | |||||||||||||||||
30-59 Days | 60-89 Days | Than | Total Past | ||||||||||||||
Past Due | Past Due | 90 Days | Due and | Total | Total Loans | ||||||||||||
Still Accruing | Still Accruing | Still Accruing | Nonaccrual | Nonaccrual | Current | Receivable | |||||||||||
Real estate loans | |||||||||||||||||
Multifamily residential | $ - | $ - | $ - | $ - | $ - | $ 48,013 | $ 48,013 | ||||||||||
Residential 1-4 family | 415 | - | - | 8,177 | 8,592 | 61,447 | 70,039 | ||||||||||
Owner-occupied commercial | 303 | 1,149 | - | 3,575 | 5,027 | 200,585 | 205,612 | ||||||||||
Nonowner-occupied commercial | - | - | 7,827 | 7,827 | 147,959 | 155,786 | |||||||||||
Other real estate loans | 167 | - | - | 922 | 1,089 | 17,666 | 18,755 | ||||||||||
Total real estate loans | 885 | 1,149 | - | 20,501 | 22,535 | 475,670 | 498,205 | ||||||||||
Construction | |||||||||||||||||
Multifamily residential | - | - | - | - | - | 1,391 | 1,391 | ||||||||||
Residential 1-4 family | 601 | 229 | - | 1,699 | 2,529 | 18,294 | 20,823 | ||||||||||
Commercial real estate | - | - | - | 1,500 | 1,500 | 11,080 | 12,580 | ||||||||||
Commercial bare land and acquisition & development | - | - | - | 13,027 | 13,027 | 12,022 | 25,049 | ||||||||||
Residential bare land and acquisition & development | 318 | 528 | - | 1,597 | 2,443 | 11,237 | 13,680 | ||||||||||
Total construction loans | 919 | 757 | - | 17,823 | 19,499 | 54,024 | 73,523 | ||||||||||
Commercial and other | 533 | - | - | 6,515 | 7,048 | 245,739 | 252,787 | ||||||||||
Consumer | 18 | - | - | - | 18 | 5,822 | 5,840 | ||||||||||
Totals | $ 2,355 | $ 1,906 | $ - | $ 44,839 | $ 49,100 | $ 781,255 | $ 830,355 | ||||||||||
PACIFIC CONTINENTAL CORPORATION | |||||||||||||||||
Age Analysis of Past Due Financing Receivables (Unaudited) | |||||||||||||||||
(In thousands) | |||||||||||||||||
As of December 31, 2010 | |||||||||||||||||
Greater | |||||||||||||||||
30-59 Days | 60-89 Days | Than | Total Past | ||||||||||||||
Past Due | Past Due | 90 Days | Due and | Total | Total Financing | ||||||||||||
Still Accruing | Still Accruing | Still Accruing | Nonaccrual | Nonaccrual | Current | Receivables | |||||||||||
Real estate loans | |||||||||||||||||
Multifamily residential | $ 2,549 | $ - | $ - | $ 1,010 | $ 3,559 | $ 54,291 | $ 57,850 | ||||||||||
Residential 1-4 family | 110 | 366 | - | 6,123 | 6,599 | 70,093 | 76,692 | ||||||||||
Owner-occupied commercial | 2,694 | 356 | - | 1,622 | 4,672 | 196,614 | 201,286 | ||||||||||
Non owner-occupied commercial | - | - | - | 8,428 | 8,428 | 154,643 | 163,071 | ||||||||||
Other real estate loans | 195 | - | - | 538 | 733 | 23,217 | 23,950 | ||||||||||
Total real estate loans | 5,548 | 722 | - | 17,721 | 23,991 | 498,858 | 522,849 | ||||||||||
Construction | |||||||||||||||||
Multifamily residential | - | - | - | 1,985 | 1,985 | 4,207 | 6,192 | ||||||||||
Residential 1-4 family | - | - | - | 2,493 | 2,493 | 20,190 | 22,683 | ||||||||||
Commercial real estate | - | - | - | 1,671 | 1,671 | 10,059 | 11,730 | ||||||||||
Commercial bare land and acquisition & development | - | - | - | 91 | 91 | 25,496 | 25,587 | ||||||||||
Residential bare land and acquisition & development | 175 | - | - | 1,032 | 1,207 | 16,056 | 17,263 | ||||||||||
Total construction loans | 175 | - | - | 7,272 | 7,447 | 76,008 | 83,455 | ||||||||||
Commercial and other | 102 | 32 | - | 8,033 | 8,167 | 236,597 | 244,764 | ||||||||||
Consumer | 7 | 5 | - | - | 12 | 5,888 | 5,900 | ||||||||||
Total | $ 5,832 | $ 759 | $ - | $ 33,026 | $ 39,617 | $ 817,351 | $ 856,968 | ||||||||||
PACIFIC CONTINENTAL CORPORATION | ||||||||||||
Credit Quality Indicators (Unaudited) | ||||||||||||
(In thousands) | ||||||||||||
As of June 30, 2011 | ||||||||||||
Loan Grade | ||||||||||||
Pass | Special Mention | Substandard | Doubtful | Totals | ||||||||
Real estate loans | ||||||||||||
Multifamily residential | $ 46,645 | $ - | $ 1,368 | $ - | $ 48,013 | |||||||
Residential 1-4 family | 54,112 | - | 15,871 | 56 | 70,039 | |||||||
Owner-occupied commercial | 196,075 | - | 9,537 | - | 205,612 | |||||||
Nonowner-occupied commercial | 146,327 | - | 9,459 | - | 155,786 | |||||||
Other real estate loans | 16,962 | - | 1,793 | - | 18,755 | |||||||
Total real estate loans | 460,121 | - | 38,028 | 56 | 498,205 | |||||||
Construction | ||||||||||||
Multifamily residential | 1,391 | - | - | - | 1,391 | |||||||
Residential 1-4 family | 14,667 | - | 6,156 | - | 20,823 | |||||||
Commercial real estate | 8,155 | - | 4,425 | - | 12,580 | |||||||
Commercial bare land and acquisition & development | 11,362 | - | 13,687 | - | 25,049 | |||||||
Residential bare land and acquisition & development | 10,104 | - | 3,576 | - | 13,680 | |||||||
Total construction loans | 45,679 | - | 27,844 | - | 73,523 | |||||||
Commercial and other | 241,236 | - | 8,792 | 2,759 | 252,787 | |||||||
Consumer | 5,758 | - | 82 | - | 5,840 | |||||||
Totals | $ 752,794 | $ - | $ 74,746 | $ 2,815 | $ 830,355 | |||||||
PACIFIC CONTINENTAL CORPORATION | ||||||||||||
Credit Quality Indicators (Unaudited) | ||||||||||||
(In thousands) | ||||||||||||
As of December 31, 2010 | ||||||||||||
Loan Grade | ||||||||||||
Pass | Special Mention | Substandard | Doubtful | Totals | ||||||||
Real estate loans | ||||||||||||
Multifamily residential | $ 55,105 | $ - | $ 2,745 | $ - | $ 57,850 | |||||||
Residential 1-4 family | 60,544 | - | 15,658 | 490 | 76,692 | |||||||
Owner-occupied commercial | 185,362 | - | 14,274 | 1,650 | 201,286 | |||||||
Nonowner-occupied commercial | 153,088 | - | 9,983 | - | 163,071 | |||||||
Other real estate loans | 20,343 | - | 3,607 | - | 23,950 | |||||||
Total real estate loans | 474,442 | - | 46,267 | 2,140 | 522,849 | |||||||
Construction | ||||||||||||
Multifamily residential | 4,206 | - | 1,986 | - | 6,192 | |||||||
Residential 1-4 family | 19,532 | - | 3,151 | - | 22,683 | |||||||
Commercial real estate | 7,114 | - | 4,616 | - | 11,730 | |||||||
Commercial bare land and acquisition & development | 11,771 | - | 13,816 | - | 25,587 | |||||||
Residential bare land and acquisition & development | 11,886 | - | 5,377 | - | 17,263 | |||||||
Total construction loans | 54,509 | - | 28,946 | - | 83,455 | |||||||
Commercial and other | 231,358 | - | 13,406 | - | 244,764 | |||||||
Consumer | 5,860 | - | - | 40 | 5,900 | |||||||
Totals | $ 766,169 | $ - | $ 88,619 | $ 2,180 | $ 856,968 | |||||||
SOURCE Pacific Continental Corporation
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