Pacific Continental Corporation Reports Second Quarter 2015 Results

Record quarterly loan growth drives second quarter results.

Jul 22, 2015, 16:35 ET from Pacific Continental Corporation

EUGENE, Ore., July 22, 2015 /PRNewswire/ -- Pacific Continental Corporation (Nasdaq: PCBK), the holding company of Pacific Continental Bank, today reported financial results for the second quarter 2015.

Recent highlights:

  • Achieved record quarterly loan growth of $50.3 million.
  • Achieved record quarterly net income of $5.1 million.
  • Achieved quarterly core deposit growth of $27.8 million.
  • Declared third quarter 2015 regular quarterly cash dividend of $0.11 per share.
  • Recognized as one of Washington's top corporate philanthropists in the Puget Sound Business Journal's 2015 Corporate Citizenship list.
  • Recognized by the Seattle Business magazine for the 5th consecutive year as one of Washington's 100 Best to Work For in 2015 in the Companies Headquartered Outside Washington category.  

Net income

Net income for second quarter 2015 was $5.1 million or $0.26 per diluted share compared to net income of $4.1 million or $0.23 per diluted share in second quarter 2014.  Return on average assets, average equity and average tangible equity for second quarter 2015 were 1.14%, 9.68%, and 12.18%, respectively, compared to 1.13%, 9.16%, and 10.53% for second quarter 2014.  In addition, the Company's efficiency ratio improved to 56.30% for second quarter 2015 compared to 58.38% for the same quarter last year.

"Our second quarter results reflect both the efforts of our bankers to develop new relationships and the successful integration of systems and people from the Capital Pacific acquisition in Portland, Oregon," said Roger Busse, chief executive officer. "We cannot be more pleased with the record financial performance generated this quarter and the blending of two outstanding organizations, including our success in client retention and the business synergies that have been created."

Loans

Growth in outstanding loans during the second quarter 2015 was a record $50.3 million.  Outstanding gross loans at June 30, 2015, were $1.31 billion.  Organic loan growth during the second 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 up $10.0 million from the previous quarter.   At June 30, 2015, loans to dental practitioners totaled $321.1 million and represented 24.58% of the loan portfolio.

"Our bankers continued to effectively develop new relationships and deepen existing relationships by providing our customers with high quality service and solutions to help customers grow their businesses," said Casey Hogan, chief operating officer. "Our pipelines continue to be strong, and we anticipate loan and deposit growth to continue into the second half of 2015."

Core deposits

Period-end Company-defined core deposits at June 30, 2015, were $1.45 billion.  Outstanding core deposits were up $27.8 million during the second quarter 2015.  Average core deposits, which removes daily volatility in balances, were $1.41 billion for second quarter 2015 compared to $1.20 billion and $1.01 billion for first quarter 2015 and second quarter 2014, respectively.  The increase in average core deposits on a linked-quarter and year-over-year basis was due to both organic growth and the March 2015 acquisition of Capital Pacific Bank.  At period-end June 30, 2015, noninterest-bearing demand deposits totaled $531.7 million and represented 36.79% of core deposits.

Credit quality and statistics

During the second quarter, the Company made a $550 thousand provision for loan losses, the first quarterly provision recorded in two years. The second quarter 2015 provision for loan losses was related to the loan growth experienced during the quarter, as credit quality statistics remained strong.  With the acquisition of the Capital Pacific loan portfolio, the allowance for loan losses as a percentage of outstanding loans at June 30, 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 includes all credit risk adjustment. At June 30, 2015, the allowance for loan losses as a percentage of nonperforming loans, net of government guarantees, remained very strong at 709.17%.  During the second quarter 2015, the Company recorded net loan charge-offs of $261 thousand.  For the first six months of 2015, the Company recorded $174 thousand in net loan charge-offs.

At June 30, 2015, nonperforming assets, net of government guarantees, totaled $14.9 million, or 0.82% of total assets, compared to $16.8 million, or 0.94% of total assets, and $15.4 million, or 1.02% of total assets, at March 31, 2015 and December 31, 2014, respectively.  During the second quarter 2015, resolutions of nonperforming loans and sales of other real estate owned continued.   Nonperforming assets at June 30, 2015, were comprised of $2.2 million of nonperforming loans, net of government guarantees, and $12.7 million in other real estate owned. Loans past-due 30-89 days were 0.19% of total loans at June 30, 2015, compared to 0.35% of total loans at March 31, 2015 and 0.08% at June 30, 2014. 

Net interest margin

The second quarter 2015 net interest margin averaged 4.39%, an increase of 10 basis points over the first quarter 2015 net interest margin, and a 4 basis point improvement over the second quarter 2014 net interest margin.  The improvement in the linked-quarter net interest margin was primarily due to accretion of acquired loan fair value marks, which added 16 basis points to the core margin.  During the second quarter 2015, the net accretion of loan fair value marks was $635 thousand, compared to $369 thousand for first quarter 2015.  Accretion of fair value marks relates to both the Capital Pacific Bank acquisition completed in March 2015 and the Century Bank acquisition completed in February 2013.   

Noninterest income and expense

Second quarter 2015 noninterest income was $1.6 million, up $351 thousand from first quarter 2015, and up $471 thousand over second quarter 2014. The increase in linked-quarter noninterest income was primarily due to the full quarter effect of higher fee income resulting from the acquisition of Capital Pacific Bank and gains on the sale of securities of $139 thousand.  The year-over-year increase in noninterest income was also due primarily to the same factors as the linked-quarter increase. 

Noninterest expense in second quarter 2015 was $11.0 million, down $942 thousand from first quarter 2015, primarily due to the $1.8 million of merger expense recorded during the first quarter 2015.  The second quarter 2015 noninterest expense levels represented the first full quarter of on-going expense related to the Capital Pacific Bank acquisition, including all personnel-related costs. 

Capital levels

The Company's consolidated capital ratios continued to be above the minimum for the FDIC's minimum "well-capitalized" designation. At June 30, 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 10.01%, 11.27%, 11.78%, and 12.88%, respectively.  This is after the application of the Basel III regulatory capital framework.  The FDIC's minimum "well-capitalized" designation ratios 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 are considered non-GAAP measures. Management believes including non-GAAP measures along with GAAP measures provides investors with a broader understanding of capital adequacy. 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)

 



June 30,


March 31,


June 30,



2015


2015


2014



(In thousands)








Total shareholders' equity

$    212,015


$    210,651


$    182,137

Subtract:







Goodwill

39,075


39,032


22,881


Core deposit intangible assets

4,150


4,274


674

Tangible shareholders' equity (non-GAAP)

$    168,790


$    167,345


$    158,582








Total assets

$ 1,830,942


$ 1,780,849


$ 1,498,763

Subtract:







Goodwill

39,075


39,032


22,881


Core deposit intangible assets

4,150


4,274


674

Total tangible assets (non-GAAP)

$ 1,787,717


$ 1,737,543


$ 1,475,208

 

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 2015 on Thursday, July 23, 2015, 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 and Denver, Colorado. Pacific Continental, with $1.8 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 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 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



June 30,


March 31,


June 30,


Quarter


Year  



2015


2015


2014


% Change


% Change

Interest and dividend income











Loans


$      16,594


$      14,185


$      13,514


16.98%


22.79%

Taxable securities


1,736


1,375


1,614


26.25%


7.56%

Tax-exempt securities


499


503


488


-0.80%


2.25%

Federal funds sold & interest-bearing deposits with banks


11


5


2


120.00%


450.00%



18,840


16,068


15,618


17.25%


20.63%












Interest expense











Deposits


845


810


821


4.32%


2.92%

Federal Home Loan Bank & Federal Reserve borrowings


239


228


280


4.82%


-14.64%

Junior subordinated debentures


56


56


56


0.00%


0.00%

Federal funds purchased


4


2


4


100.00%


0.00%



1,144


1,096


1,161


4.38%


-1.46%












Net interest income


17,696


14,972


14,457


18.19%


22.40%












Provision for loan losses


550


-


-


NA


NA

Net interest income after provision for loan losses


17,146


14,972


14,457


14.52%


18.60%












Noninterest income











Service charges on deposit accounts


661


575


540


14.96%


22.41%

Bankcard income


214


197


229


8.63%


-6.55%

Bank-owned life insurance income


170


109


117


55.96%


45.30%

Gain (loss) on sale of investment securities


139


53


(100)


162.26%


-239.00%

Impairment losses on investment securities (OTTI)


(13)


-


-


NA


NA

Other noninterest income


456


342


370


33.33%


23.24%



1,627


1,276


1,156


27.51%


40.74%












Noninterest expense











Salaries and employee benefits


6,992


6,409


6,093


9.10%


14.75%

Premises and equipment


1,094


980


924


11.63%


18.40%

Data processing


821


684


693


20.03%


18.47%

Legal and professional fees


491


400


251


22.75%


95.62%

Business development


411


353


340


16.43%


20.88%

FDIC insurance assessment


273


212


217


28.77%


25.81%

Other real estate (income) expense


(60)


241


16


-124.90%


-475.00%

Merger related expenses (1)


-


1,836


-


-100.00%


NA

Other noninterest expense


1,008


857


735


17.62%


37.14%



11,030


11,972


9,269


-7.87%


19.00%












Income before provision for income taxes


7,743


4,276


6,344


81.08%


22.05%

Provision for income taxes


2,648


1,474


2,196


79.65%


20.58%












Net income


$        5,095


$        2,802


$        4,148


81.83%


22.83%












Earnings per share:











Basic


$          0.26


$          0.15


$          0.23


73.33%


13.04%

Diluted


$          0.26


$          0.15


$          0.23


73.33%


13.04%












Weighted average shares outstanding:











Basic


19,562,363


18,232,076


17,889,562
















Common stock equivalents attributable to stock-based awards


226,521


212,895


229,850





Diluted


19,788,884


18,444,971


18,119,412
















PERFORMANCE RATIOS











Return on average assets 


1.14%


0.72%


1.13%





Return on average equity (book) 


9.68%


5.91%


9.16%





Return on average equity (tangible) (2)


12.18%


7.05%


10.53%





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


4.39%


4.29%


4.35%





Efficiency ratio (4)


56.30%


72.47%


58.38%






(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)










Six months ended


Year over



June 30,


June 30,


Year  



2015


2014


% Change

Interest and dividend income







Loans


$      30,780


$      26,688


15.33%

Taxable securities


3,112


3,146


-1.08%

Tax-exempt securities


1,002


972


3.09%

Federal funds sold & interest-bearing deposits with banks


16


4


300.00%



34,910


30,810


13.31%








Interest expense







Deposits


1,655


1,627


1.72%

Federal Home Loan Bank & Federal Reserve borrowings


468


560


-16.43%

Junior subordinated debentures


112


112


0.00%

Federal funds purchased


5


9


-44.44%



2,240


2,308


-2.95%








Net interest income


32,670


28,502


14.62%








Provision for loan losses


550


-


NA

Net interest income after provision for loan losses


32,120


28,502


12.69%








Noninterest income







Service charges on deposit accounts


1,236


1,058


16.82%

Bankcard income


411


446


-7.85%

Bank-owned life insurance income


279


234


19.23%

Gain (loss) on sale of investment securities


192


(36)


-633.33%

Impairment losses on investment securities (OTTI)


(13)


-


NA

Other noninterest income


798


778


2.57%



2,903


2,480


17.06%








Noninterest expense







Salaries and employee benefits


13,401


11,912


12.50%

Premises and equipment


2,073


1,867


11.03%

Data processing


1,505


1,362


10.50%

Legal and professional fees


890


739


20.43%

Business development


765


715


6.99%

FDIC insurance assessment


486


437


11.21%

Other real estate expense


181


239


-24.27%

Merger related expense (1)


1,836


-


NA

Other noninterest expense


1,867


1,511


23.56%



23,004


18,782


22.48%








Income before provision for income taxes


12,019


12,200


-1.48%

Provision for income taxes


4,122


4,220


-2.32%








Net income


$        7,897


$        7,980


-1.04%








Earnings per share:







Basic


$          0.42


$          0.45


-6.67%

Diluted


$          0.41


$          0.44


-6.82%








Weighted average shares outstanding:







Basic


18,900,895


17,893,555










Common stock equivalents attributable to stock-based awards


227,090


236,278



Diluted


19,127,985


18,129,833










PERFORMANCE RATIOS







Return on average assets 


0.94%


1.10%



Return on average equity (book) 


7.89%


8.89%



Return on average equity (tangible) (2)


9.68%


10.22%



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


4.34%


4.34%



Efficiency ratio (4)


63.70%


59.62%




(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 amounts)

(Unaudited)









Linked 

Year over



June 30,


March 31,


June 30,


Quarter

Year  



2015


2015


2014


% Change

% Change

ASSETS










Cash and due from banks


$      29,812


$      25,718


$      28,219


15.92%

5.65%

Interest-bearing deposits with banks


9,790


12,491


15,224


-21.62%

-35.69%

Total cash and cash equivalents


39,602


38,209


43,443


3.65%

-8.84%











Securities available-for-sale


383,618


379,497


344,645


1.09%

11.31%

Loans, less allowance for loan losses and net deferred fees


1,288,919


1,238,982


1,014,346


4.03%

27.07%

Interest receivable


5,833


5,387


5,101


8.28%

14.35%

Federal Home Loan Bank stock


5,468


10,531


10,227


-48.08%

-46.53%

Property and equipment, net of accumulated depreciation


17,854


17,932


18,366


-0.43%

-2.79%

Goodwill and intangible assets


43,225


43,306


23,555


-0.19%

83.51%

Deferred tax asset


6,036


4,887


7,154


23.51%

-15.63%

Taxes receivable


103


656


-


-84.30%

NA

Other real estate owned


12,666


14,167


11,531


-10.60%

9.84%

Bank-owned life insurance


22,571


22,401


16,370


0.76%

37.88%

Other assets


5,047


4,894


4,025


3.13%

25.39%











Total assets


$ 1,830,942


$ 1,780,849


$ 1,498,763


2.81%

22.16%











LIABILITIES AND SHAREHOLDERS' EQUITY










Deposits










Noninterest-bearing demand


$    531,697


$    503,735


$    397,942


5.55%

33.61%

Savings and interest-bearing checking


825,858


833,325


565,265


-0.90%

46.10%

Core time deposits


87,663


80,337


63,335


9.12%

38.41%

Total core deposits (2)


1,445,218


1,417,397


1,026,542


1.96%

40.79%











Non-core time deposits


68,963


79,350


106,112


-13.09%

-35.01%

Total deposits


1,514,181


1,496,747


1,132,654


1.16%

33.68%











Securities sold under agreements to repurchase


368


53


-


594.34%

NA

Federal funds and overnight funds purchased


5,500


-


6,410


NA

-14.20%

Federal Home Loan Bank borrowings


84,000


61,000


164,500


37.70%

-48.94%

Junior subordinated debentures


8,248


8,248


8,248


0.00%

0.00%

Accrued interest and other payables


6,630


4,150


4,814


59.76%

37.72%

Total liabilities


1,618,927


1,570,198


1,316,626


3.10%

22.96%











Shareholders' equity










Common stock: 50,000,000 shares authorized.  Shares issued and outstanding: 19,591,532 at June 30, 2015, 19,496,920 at March 31, 2015 and 17,848,900 at June 30, 2014


155,325


155,298


132,532


0.02%

17.20%

Retained earnings


53,150


50,014


45,887


6.27%

15.83%

Accumulated other comprehensive income


3,540


5,339


3,718


-33.70%

-4.79%



212,015


210,651


182,137


0.65%

16.40%











Total liabilities and shareholders' equity


$ 1,830,942


$ 1,780,849


$ 1,498,763


2.81%

22.16%





















CAPITAL RATIOS










Total capital (to risk weighted assets) (3)


12.88%


13.08%


15.73%




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


11.78%


11.97%


14.48%




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


11.27%


11.41%


NA




Tier I capital (to leverage assets) (3)


10.01%


11.31%


11.26%




Tangible common equity (to tangible assets)(1)


9.44%


9.63%


10.75%




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


11.32%


11.58%


14.44%














OTHER FINANCIAL DATA










Shares outstanding at end of period


19,591,532


19,496,920


17,848,900




Tangible shareholders' equity(1)


$    168,790


$    167,345


$    158,582




Book value per share


$        10.82


$        10.80


$        10.20




Tangible book value per share


$          8.62


$          8.58


$          8.88





(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 Basel III capital framework methodology was implemented for all banks.  The current  period 

capital ratios have been compiled based on the new methodology.  The prior period capital ratios have not been 

restated in conformity with the new methodology.  

 

PACIFIC CONTINENTAL CORPORATION

Loans by Type

(In thousands)

(Unaudited)




















Linked 


Year over



June 30,


March 31,


June 30,


Quarter


Year  



2015


2015


2014


% Change


% Change

LOANS BY TYPE











Real estate secured loans:











Permanent loans:











Multi-family residential


$             68,289


$      69,968


$      50,867


-2.40%


34.25%

Residential 1-4 family


57,112


55,702


46,287


2.53%


23.39%

Owner-occupied commercial


346,065


337,058


255,562


2.67%


35.41%

Nonowner-occupied commercial


275,077


256,119


182,141


7.40%


51.02%

Total permanent real estate loans


746,543


718,847


534,857


3.85%


39.58%

Construction loans:











Multi-family residential


6,590


7,318


19,539


-9.95%


-66.27%

Residential 1-4 family


30,145


28,913


33,951


4.26%


-11.21%

Commercial real estate


31,659


25,477


28,019


24.27%


12.99%

Commercial bare land and acquisition & development


15,870


11,987


11,096


32.39%


43.02%

Residential bare land and acquisition & development


7,074


6,272


6,240


12.79%


13.37%

Total construction real estate loans


91,338


79,967


98,845


14.22%


-7.59%

Total real estate loans


837,881


798,814


633,702


4.89%


32.22%

Commercial loans


459,458


449,793


392,810


2.15%


16.97%

Consumer loans


3,783


3,528


3,410


7.23%


10.94%

Other loans


5,025


3,742


1,207


34.29%


316.32%

Gross loans


1,306,147


1,255,877


1,031,129


4.00%


26.67%

Deferred loan origination fees


(1,215)


(1,171)


(1,108)


3.76%


9.66%



1,304,932


1,254,706


1,030,021


4.00%


26.69%

Allowance for loan losses


(16,013)


(15,724)


(15,675)


1.84%


2.16%



$        1,288,919


$ 1,238,982


$ 1,014,346


4.03%


27.07%












SELECTED MARKET LOAN DATA











  Eugene market gross loans, period-end


$           358,806


$    358,129


$    354,430


0.19%


1.23%

  Portland market gross loans, period-end


631,420


612,762


399,764


3.04%


57.95%

  Seattle market gross loans, period-end


134,341


119,306


134,969


12.60%


-0.47%

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


181,580


165,680


141,966


9.60%


27.90%

    Total gross loans, period-end


$        1,306,147


$ 1,255,877


$ 1,031,129


4.00%


26.67%












DENTAL LOAN DATA (2)











  Local Dental gross loans, period-end


$           156,315


$    159,726


$    169,102


-2.14%


-7.56%

  National Dental gross loans, period-end


164,740


151,280


133,720


8.90%


23.20%

    Total gross dental loans, period-end


$           321,055


$    311,006


$    302,822


3.23%


6.02%


(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


Six months ended



June 30,


March 31,


June 30,


June 30,


June 30,



2015


2015


2014


2015


2014

BALANCE SHEET AVERAGES











  Loans, net of deferred fees


$ 1,273,148


$ 1,093,381


$ 1,026,937


$ 1,183,761


$ 1,017,800

  Allowance for loan losses


(15,782)


(15,675)


(15,546)


(15,729)


(15,725)

    Loans, net of allowance


1,257,366


1,077,706


1,011,391


1,168,032


1,002,075

  Securities and short-term deposits


398,836


371,061


348,985


385,026


349,874

   Earning assets


1,656,202


1,448,767


1,360,376


1,553,058


1,351,949

  Noninterest-earning assets


144,325


125,000


113,094


134,715


115,368

        Assets


$ 1,800,527


$ 1,573,767


$ 1,473,470


$ 1,687,773


$ 1,467,317












  Interest-bearing core deposits(1)


$    901,577


$    760,838


$    648,530


$    831,596


$    647,825

  Noninterest-bearing core deposits(1)


508,259


439,780


362,204


474,209


353,833

    Core deposits(1)


1,409,836


1,200,618


1,010,734


1,305,805


1,001,658

  Noncore interest-bearing deposits


73,469


82,986


105,229


78,201


103,336

    Deposits


1,483,305


1,283,604


1,115,963


1,384,006


1,104,994

  Borrowings


100,747


91,051


171,385


95,925


176,355

  Other noninterest-bearing liabilities


5,466


6,772


4,545


6,117


4,912

       Liabilities


1,589,518


1,381,427


1,291,893


1,486,048


1,286,261

  Shareholders' equity (book)


211,009


192,340


181,577


201,725


181,056

       Liabilities and equity


$ 1,800,527


$ 1,573,767


$ 1,473,470


$ 1,687,773


$ 1,467,317












  Shareholders' equity (tangible)(2)


$    167,757


$    161,247


$    158,006


$    164,516


$    157,470












Period-end earning assets


$ 1,682,327


$ 1,630,970


$ 1,374,215
















SELECTED MARKET DEPOSIT DATA











  Eugene market core deposits, period-end(1)


$    759,079


$    742,397


$    616,294





  Portland market core deposits, period-end(1)


521,317


516,976


250,288





  Seattle market core deposits, period-end(1)


164,822


158,024


159,960





    Total core deposits, period-end(1)


1,445,218


1,417,397


1,026,542





  Other deposits, period-end


68,963


79,350


106,112





      Total


$ 1,514,181


$ 1,496,747


$ 1,132,654
















  Eugene market core deposits, average(1)


$    742,252


$    711,718


$    624,721





  Portland market core deposits, average(1)


508,547


332,791


234,567





  Seattle market core deposits, average(1)


159,037


156,109


151,446





    Total core deposits, average(1)


1,409,836


1,200,618


1,010,734





  Other deposits, average


73,469


82,986


105,229





      Total


$ 1,483,305


$ 1,283,604


$ 1,115,963
















NET INTEREST MARGIN RECONCILIATION











  Yield on average loans (3)


5.34%


5.34%


5.36%


5.36%


5.37%

  Yield on average securities(4)


2.61%


2.35%


2.72%


2.52%


2.67%

    Yield on average earning assets(4)


4.67%


4.57%


4.68%


4.63%


4.67%












  Rate on average interest-bearing core deposits


0.27%


0.28%


0.29%


0.27%


0.30%

  Rate on average interest-bearing non-core deposits


1.33%


1.41%


1.36%


1.37%


1.32%

    Rate on average interest-bearing deposits


0.35%


0.39%


0.44%


0.37%


0.44%












  Rate on average borrowings


1.19%


1.27%


0.80%


1.23%


0.78%

    Cost of interest-bearing funds


0.43%


0.48%


0.50%


0.45%


0.50%












    Interest rate spread(4)


4.24%


4.10%


4.18%


4.19%


4.17%












       Net interest margin- fully tax equivalent yield(4)


4.39%


4.29%


4.35%


4.34%


4.34%












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


0.16%


0.10%


0.03%


0.13%


0.05%


(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 $180, $147 and $138 for the three months ended June 30, 2015, March 31, 2015 and June 30, 2014, respectively, and $327 and $267 for the six months ended June 30, 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 $158, $82 and $31 for the three months ended June 30, 2015, March 31, 2015, and June 30, 2014 , respectively and $240 and $62 for the six months ended June 30, 2015 and 2014, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $268, $271 and $263 for the three months ended June 30, 2015, March 31, 2015 and June 30, 2014 , respectively, and $539 and $523 for the six months ended June 30, 2015 and 2014, respectively. 

(5)During the three months ended June 30, 2015, March 31, 2015 and June 30, 2014, accretion of the fair  value adjustment on acquired loans contributed to interest income $635, $369, and $116, respectively, and $1,004 and $341 for the six months ended June 30, 2015 and 2014, respectively.

 

PACIFIC CONTINENTAL CORPORATION




Nonperforming Assets, Asset Quality Ratios and Allowance for Loan Losses




(Dollars in thousands, except per share data)




(Unaudited)



























June 30,


March 31,


June 30,












2015


2015


2014








NONPERFORMING ASSETS










Non-accrual loans











Real estate secured loans:












Permanent loans:













Multi-family residential

$              -


$              -


$              -








Residential 1-4 family

688


830


473








Owner-occupied commercial

1,117


1,117


1,703








Nonowner-occupied commercial

878


897


708









Total permanent real estate loans

2,683


2,844


2,884







Construction loans:













Multi-family residential

-


-


-








Residential 1-4 family

-


166


-








Commercial real estate

-


-


-








Commercial bare land and acquisition & development

-


-


-








Residential bare land and acquisition & development

-


-


-









Total construction real estate loans

-


166


-










Total real estate loans

2,683


3,010


2,884






Commercial loans

955


1,067


2,047











Total nonaccrual loans

3,638


4,077


4,931





90-days past due and accruing interest

-


-


-






Total nonperforming loans

3,638


4,077


4,931







Nonperforming loans guaranteed by government

(1,380)


(1,422)


(325)








Net nonperforming loans

2,258


2,635


4,606





Other real estate owned

12,666


14,167


11,531








Total nonperforming assets, net of guaranteed loans

$    14,924


$    16,802


$    16,137





















ASSET QUALITY RATIOS











Allowance for loan losses as a percentage of total loans outstanding

 

1.23%


1.25%


 

1.52%






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

 

709.17%


596.74%


340.32%






Net loan (recoveries) charge offs as a percentage of average loans, annualized

 

0.05%


-0.03%


0.05%






Net nonperforming loans as a percentage of total loans

0.17%


0.21%


0.45%






Nonperforming assets as a percentage of total assets

0.82%


0.94%


1.08%






Consolidated classified asset ratio(1)

26.52%


27.60%


24.72%






Past due as a percentage of total loans(2)

0.19%


0.35%


0.08%




























Three months ended


Six months ended








June 30,


March 31,


June 30,


June 30,


June 30,








2015


2015


2014


2015


2014

ALLOWANCE FOR LOAN LOSSES










Balance at beginning of period

$    15,724


$    15,637


$    15,394


$             15,637


$             15,917

Provision for loan losses

550


-


-


550


-

Loan charge-offs

(454)


(73)


(30)


(527)


(631)

Loan recoveries

193


160


311


353


389

Net  (charge-offs) recoveries

(261)


87


281


(174)


(242)

Balance at end of period

$    16,013


$    15,724


$    15,675


$             16,013


$             15,675


(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 per share data)

(Unaudited)








2nd Quarter

1st Quarter

4th Quarter

3rd Quarter

2nd Quarter


2015

2015

2014

2014

2014

EARNINGS






Net interest income

$      17,696

$      14,972

$      14,374

$      14,572

$      14,457

Provision for loan loss

$           550

$                -

$                -

$                -

$                -

Noninterest income

$        1,627

$        1,276

$        1,318

$        1,197

$        1,156

Noninterest expense

$      11,030

$      11,972

$        9,798

$        9,149

$        9,269

Net income

$        5,095

$        2,802

$        3,631

$        4,431

$        4,148

Basic earnings per share

$          0.26

$          0.15

$          0.20

$          0.25

$          0.23

Diluted earnings per share

$          0.26

$          0.15

$          0.20

$          0.25

$          0.23

Average shares outstanding

19,562,363

18,232,076

17,717,270

17,749,217

17,889,562

Average diluted shares outstanding

19,788,884

18,444,971

17,939,752

17,970,458

18,119,412







PERFORMANCE RATIOS






Return on average assets

1.14%

0.72%

0.97%

1.18%

1.13%

Return on average equity (book)

9.68%

5.91%

7.85%

9.69%

9.16%

Return on average equity (tangible) (1)

12.18%

7.05%

9.01%

11.13%

10.53%

Net interest margin - fully tax equivalent yield (2)

4.39%

4.29%

4.25%

4.29%

4.35%

Efficiency ratio (tax equivalent) (3)

56.30%

72.47%

61.39%

57.04%

58.38%

Full-time equivalent employees

322

317

288

289

283







CAPITAL






Tier 1 leverage ratio

10.01%

11.31%

11.33%

11.20%

11.26%

Common Equity tier 1 ratio

11.27%

11.41%

NA

NA

NA

Tier 1 risk based ratio

11.78%

11.97%

14.48%

14.44%

14.48%

Total risk based ratio

12.88%

13.08%

15.73%

15.69%

15.73%

Book value per share

$        10.82

$        10.80

$        10.39

$        10.30

$        10.20

Regular cash dividend per share

$          0.10

$          0.10

$          0.10

$          0.10

$          0.10

Special cash dividend per share

 NA 

 NA 

$          0.05

$          0.03

$          0.11







ASSET QUALITY






Allowance for loan losses (ALL)

$      16,013

$      15,724

$      15,637

$      15,722

$      15,675

Non performing loans (NPLs) net of government guarantees

$        2,258

$        2,635

$        1,989

$        2,932

$        4,606

Non performing assets (NPAs) net of government guarantees

$      14,924

$      16,802

$      15,363

$      16,109

$      16,137

Net loan (recoveries) charge offs 

$           261

$           (87)

$             85

$           (47)

$          (281)

ALL as a percentage of gross loans

1.23%

1.25%

1.50%

1.52%

1.52%

ALL as a % NPLs, net of government guarantees

709.17%

596.74%

786.17%

536.22%

340.32%

Net loan charge offs (recoveries) to average loans

0.05%

-0.03%

0.03%

-0.02%

-0.11%

Net NPLs as a percentage of total loans

0.17%

0.21%

0.19%

0.28%

0.45%

Nonperforming assets as a percentage of total assets

0.82%

0.94%

1.02%

1.08%

1.08%

Consolidated classified asset ratio(4)

26.52%

27.60%

24.54%

24.27%

24.72%

Past due as a percentage of total loans(5)

0.19%

0.35%

0.15%

0.16%

0.08%







END OF PERIOD BALANCES






Total securities and short term deposits

$    393,408

$    391,988

$    356,804

$    353,893

$    359,869

Total loans net of allowance

$ 1,288,919

$ 1,238,982

$ 1,029,384

$ 1,019,127

$ 1,014,346

Total earning assets

$ 1,682,327

$ 1,630,970

$ 1,386,188

$ 1,373,020

$ 1,374,215

Total assets

$ 1,830,942

$ 1,780,849

$ 1,504,325

$ 1,489,719

$ 1,498,763

Total non-interest bearing deposits

$    531,697

$    503,735

$    407,311

$    390,790

$    397,942

Core deposits(6)

$ 1,445,218

$ 1,417,397

$ 1,110,861

$ 1,047,211

$ 1,026,542

Total deposits

$ 1,514,181

$ 1,496,747

$ 1,209,093

$ 1,145,235

$ 1,132,654







AVERAGE BALANCES






Total securities and short term deposits

$    398,836

$    371,061

$    356,389

$    351,695

$    348,985

Total loans net of allowance

$ 1,257,366

$ 1,077,706

$ 1,013,049

$ 1,023,266

$ 1,011,391

Total earning assets

$ 1,656,202

$ 1,448,767

$ 1,369,438

$ 1,374,961

$ 1,360,376

Total assets

$ 1,800,527

$ 1,573,767

$ 1,484,542

$ 1,488,747

$ 1,473,470

Total non-interest bearing deposits

$    508,259

$    439,780

$    404,569

$    391,738

$    362,204

Core deposits(6)

$ 1,409,836

$ 1,200,618

$ 1,082,950

$ 1,037,336

$ 1,010,734

Total deposits

$ 1,483,305

$ 1,283,604

$ 1,176,938

$ 1,141,897

$ 1,115,963


(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)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.

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

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

 

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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