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SECURITIES & EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
COMMISSION FILE NUMBER 0-30106
PACIFIC CONTINENTAL CORPORATION
(Exact name of registrant as specified in its charter)
OREGON 93-1269184
(State of Incorporation) (IRS Employer Identification No)
111 West 7th Avenue
Eugene, Oregon 97401
(Address of principal executive offices)
(541) 686-8685
(Registrant's telephone number)
Securities registered pursuant to 12(b) of the Act: None
Securities registered pursuant to 12(g) of the Act:
$1.00 Par Value Common Stock
Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes X No ___
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Check if there is no disclosure of delinquent filers in response to item 405 of
Regulation S-K contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this form 10-K or any
amendment to this Form 10-K. ( )
The aggregate market value of the voting stock held by non-affiliates was
$49,893,272 based on the closing price at January 31, 2001 of $11.00.
The number of shares outstanding of each of the registrant's classes of common
stock, as of January 31, 2001 was 4,535,751 shares of $1.00 par value Common
Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Part II incorporates by reference information from the registrant's Annual
Report to Shareholders for the year ended December 31, 2000. Part III
incorporates by reference information from the registrant's definitive proxy
statement for the 2001 annual meeting of shareholders.
PACIFIC CONTINENTAL CORPORATION
FORM 10-K
ANNUAL REPORT
TABLE OF CONTENTS
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PART 1 Page
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Item 1: Business 3
Item 2: Properties 14
Item 3: Legal Proceedings 14
Item 4: Submission of Matters to a Vote of Security Holders 14
PART II (Items 6 through 8 are incorporated by reference from Pacific
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Continental Corporation's 2000 Annual Report to Shareholders)
Item 5: Market for Registrant's Common Equity and Related 15
Stockholder Matters
Item 6: Selected Financial Data 16
Item 7: Management's Discussion and Analysis of Financial 16
Condition and Results of Operations
Item 7a: Quantitative and Qualitative Disclosures About Market Risk 16
Item 8: Financial Statements and Supplementary Data 16
Item 9: Changes In and Disagreements with Accountants 16
on Accounting and Financial Disclosure
PART III (Items 10 through 13 are incorporated by reference from
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Pacific Continental Corporation's definitive proxy statement for the
annual meeting of shareholders scheduled for April 24, 2001)
Item 10: Directors and Executive Officers of the Registrant 16
Item 11: Executive Compensation 16
Item 12: Security Ownership of Certain Beneficial Owners 16
and Management
Item 13: Certain Relationships and Related Transactions 17
PART IV
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Item 14: Exhibits, Financial Statement Schedules, and Reports 17
on Form 8-K
SIGNATURES 18
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PART I
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ITEM 1. Business
- ------- --------
General
Pacific Continental Corporation (the "Company", or the "Registrant") is an
Oregon corporation and one-bank holding company located in Eugene, Oregon. The
Company was organized on June 7, 1999, pursuant to a holding company
reorganization of Pacific Continental Bank, its wholly owned subsidiary.
The Company's principal business activities are conducted through its full-
service commercial bank subsidiary, Pacific Continental Bank (the "Bank"), an
Oregon state-chartered bank with deposits insured by the Federal Deposit
Insurance Corporation ("FDIC"). At December 31, 2000, the Bank had facilities in
six Oregon cities and towns and operated nine full-service and one limited-
service office.
Results
For the year ended December 31, 2000, the operations of the Registrant on a
combined basis earned net income of $4.8 million or $1.05 per diluted share. The
consolidated equity of the Registrant at December 31, 2000, was $30.4 million
with 4.5 million shares outstanding and a book value of $6.70 per share. Net
loans, including loans held for sale, of $222.4 at December 31, 2000,
represented 76 percent of total assets. Deposits total $250.1 million at year-
end 2000. For more information regarding the Company's results, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operation" and "Financial Statements and Supplementary Data" incorporated by
reference from the Company's 2000 Annual Report to Shareholders.
THE BANK
General
The Bank commenced operations on August 15, 1972. The Bank is engaged in general
commercial banking, with emphasis on lending to small and medium-sized
businesses and construction lending for commercial facilities and single family
residences. The Bank operates under the banking laws of the State of Oregon and
the rules and regulations of the FDIC.
The Bank provides a wide range of financial services tailored to the needs of
the community. The Bank's strategy is to emphasize its local affiliations and
to provide high quality banking services to individuals and businesses.
Primary Market Area
The Bank's markets consist of Lane, Washington, and Linn Counties in the State
of Oregon. The Bank has seven full-service offices in Lane County, two full-
service offices in Washington County, and one limited-service office in Linn
County. Within Lane County, the Bank has its administrative office and five
branch offices in Eugene, one branch office in Springfield, and one branch
office in Junction City. Within Washington County, the Bank has a branch office
in Beaverton and one branch office in Tualatin. Within Linn County, the Bank has
one limited-service branch office in Halsey.
Competition
The Bank competes with a number of commercial banks, savings banks, and credit
unions. Commercial banking within the State of Oregon is highly competitive for
both deposits and loans. The Bank differentiates itself by providing superior
levels of service for its selected client base. The Bank focuses on small to
medium-size businesses, their owners and professionals in addition to local
construction lending.
-3-
Services Provided
Lending Activities
The Bank emphasizes two areas of lending within its primary market area: loans
to small and medium-size businesses and loans to builders for the construction
of commercial facilities and single family residences.
Commercial loans, secured and unsecured, are made primarily to small and medium-
size businesses operating in Lane and Washington Counties and surrounding areas.
These loans are available for general operating purposes, acquisition of fixed
assets, purchases of equipment and machinery, financing of inventory and
accounts receivable, and other business purposes. The Bank also originates Small
Business Administration ("SBA") loans and loans guaranteed by the Farm Service
Agency. The Bank has a preferred lender status with the SBA.
Within its primary markets, the Bank concentrates on construction loan financing
for commercial facilities and for pre-sold, custom, and speculative home
construction. The major thrust of residential construction lending is for the
construction of single family residences. The Bank also finances requests for
duplexes and other multi-family residences.
Fixed-rate and variable rate residential mortgage loans are offered through the
Bank's mortgage loan department. Nearly all of the residential mortgage loans
originated are sold in the secondary market along with the mortgage loan
servicing rights.
The Bank makes secured and unsecured loans to individuals for various purposes
including purchases of automobiles, mobile homes, boats and other recreational
vehicles, home improvements, education, and personal investment.
The Bank offers credit card services to its consumer and business customers. The
Bank uses an outside vendor for credit card processing. In addition, the Bank
provides merchant bankcard processing services to the Bank's business customers
through an outside processor.
The Board of Directors has approved specific lending policies and procedures for
the Bank and is responsible for implementation of the policies. The lending
policies and procedures include guidelines for loan term, loan-to-value rates,
collateral appraisals, and interest rates. The loan policies also vest varying
levels of loan authority in management, the Bank's Asset and Liability
Committee, and the Board of Directors. Management of the Bank monitors lending
activities through weekly management meetings, monthly reporting, and periodic
review of loans.
Deposit Services
The Bank offers a full range of deposit services that are typically available in
most banks and savings banks, including checking accounts, savings, money market
accounts, and time deposits. The transaction accounts and time deposits are
tailored to the Bank's primary market area at rates competitive with those
offered in the area. Additional funds are generated through national networks
for institutional deposits of $99,000 or more. All deposit accounts are insured
by the FDIC to the maximum amount permitted by law.
The Bank has invested in image technology for the processing of checks. The Bank
is the only financial institution in Lane, Washington, and Linn Counties
offering this service. In addition, the Bank allows 24-hour customer access to
deposit and loan information via telephone and cash management products. The
Bank began offering an online internet banking and cash management products to
individuals and businesses during the year 2000.
Other Services
-4-
The Bank provides other traditional commercial and consumer banking services,
including safe deposit services, debit and ATM cards, savings bonds, cashier's
checks, travelers checks, notary services and others. The Bank is a member of
the Star, Explore, and Plus ATM networks and utilizes an outside processor for
the processing of these automated transactions.
Employees
At December 31, 2000, the Bank employed 125 full time equivalent employees. None
of these employees are represented by labor unions. A number of benefit programs
are available to eligible employees, including group medical plans, paid sick
leave, paid vacation, group life insurance, 401(k) plans, and stock option
plans.
Supervision and Regulation
General
The Company and subsidiaries are extensively regulated under federal and state
law. These laws and regulations are primarily intended to protect depositors,
not shareholders. The discussion below describes and summarizes certain statutes
and regulations. These descriptions and summaries are qualified in their
entirety by reference to the particular statute or regulation. Changes in
applicable laws or regulations may have a material effect on the business and
prospects of the Company. The operations of the Company may also be affected by
changes in the policies of banking and other government regulators. The Company
cannot accurately predict the nature or extent of the effects on its business
and earnings that fiscal or monetary policies, or new federal or state laws, may
have in the future.
Changes in Banking Laws and Regulations
The laws and regulations that affect banks and bank holding companies have
recently undergone significant changes brought about by the Financial Services
Modernization Act of 1999. Generally, the act (i) repeals the historical
restrictions on preventing banks from affiliating with securities firms, (ii)
provides a uniform framework for the activities of banks, savings institutions,
and their holding companies, (iii) broadens the activities that may be conducted
by national banks and banking subsidiaries of bank holding companies, (iv)
provides an enhanced framework for protecting the privacy of consumers
information, and (v) addresses a variety of other legal and regulatory issues
affecting both day-to-day operations and long-term activities of financial
institutions.
Bank holding companies, which qualify and elect to become financial holding
companies, are permitted to engage in a wider variety of financial activities
than permitted under previous law, particularly with respect to insurance and
securities activities. In addition, in a change from previous law, bank holding
companies will be in a position to be owned, controlled or acquired by any
company engaged in financially related activities, so long as such company meets
certain regulatory requirements. The act also permits national banks (and, in
states with wildcard statutes, certain state banks), either directly or through
operating subsidiaries, to engage in certain non-banking financial activities.
The Company does not believe that the act will negatively affect the operations
of it or the Bank in the short term. However, to the extent the legislation
permits banks, securities firms, and insurance companies to affiliate, the
financial services industry may experience further consolidation. This
consolidation could result in a growing number of larger financial institutions
that offer a wider variety of financial services than the Company currently
offers and that can aggressively compete in the markets currently served by the
Company and the Bank.
Federal Bank Holding Company Regulation
The Company is a bank holding company as defined in the Bank Holding Company Act
of 1956, as amended (the "BHCA"), and is therefore subject to regulation,
supervision and examination by the Federal
-5-
Reserve. In general, the BHCA limits the business of bank holding companies to
owning or controlling banks and engaging in other activities closely related to
banking. The Company must file reports with the Federal Reserve and must provide
it with such additional information as it may require.
Holding Company Bank Ownership. The BHCA requires every bank holding company to
- ------------------------------
obtain the prior approval of the Federal Reserve before (i) acquiring, directly
or indirectly, ownership or control of any voting shares of another bank or bank
holding company if, after such acquisition, it would own or control more than 5
percent of such shares, (ii) acquiring all or substantially all of the assets of
another bank or bank holding company, or (iii) merging or consolidating with
another bank holding company.
Holding Company Control of Nonbanks. With some exceptions, the BHCA also
- -----------------------------------
prohibits a bank holding company from acquiring or retaining direct or indirect
ownership of control of more than 5 percent of the voting shares of any company
which is not a bank or bank holding company, or from engaging directly or
indirectly in activities other than those of banking, managing or controlling
banks, or providing services for its subsidiaries. The principal exceptions to
these prohibitions involve certain non-bank activities, which by statute or by
Federal Reserve regulation or order, have been identified as activities closely
related to the business of banking or of managing or controlling banks.
Transactions with Affiliates. Subsidiary banks of a bank holding company are
- ----------------------------
subject to restrictions imposed by the Federal Reserve Act on extensions of
credit to the holding company or its subsidiaries, on investments in their
securities and on the use of their securities as collateral for loans to any
borrower. These regulations and restrictions may limit the Company's ability to
obtain funds from the Bank for its cash needs, including, funds for payment of
dividends, interest, and operational expenses.
Tying Arrangements. Under the Federal Reserve Act and certain regulations of
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the Federal Reserve, a bank holding company and its subsidiaries are prohibited
from engaging in certain tying arrangements in connections with any extension of
credit, lease or sale of property, or furnishing or services. For example, with
certain exceptions, neither the Company or the Bank may condition an extension
of credit to a customer on either (I) a requirement that the customer obtain
additional services provided by the Company, or (ii) an agreement by a customer
to refrain from obtaining other services from a competitor.
Support of Subsidiary Banks. Under Federal Reserve Board policy, the Company is
- ---------------------------
expected to act as a source of financial and managerial strength to the Bank.
This means that the Company is required to commit, as necessary, resources to
support the Bank. Any capital loans a bank holding company makes to its
subsidiary banks are subordinate to deposits and to certain other indebtedness
of those subsidiary banks.
State Law Restrictions. As an Oregon corporation, the Company is subject to
- ----------------------
certain limitations and restrictions under applicable Oregon corporate law. For
example, state law restrictions in Oregon include limitations and restrictions
relating to: indemnification of directors, distributions to shareholders,
transactions involving directors, officers or interested shareholders,
maintenance of books, records and minutes, and observance of certain corporate
formalities.
Federal and State Regulation of Pacific Continental Bank
The Bank is an Oregon stock bank with deposits insured by the FDIC and is
subject to the supervision and regulation of the Oregon Director of Banks and
the FDIC. These agencies have the authority to prohibit banks from engaging in
what they believe constitute unsafe or unsound banking practices.
CRA. The Community Reinvestment Act (the "CRA") requires that, in conjunction
- ---
with or examinations of financial institutions within their jurisdiction, the
Federal Reserve or the FDIC evaluates the record of the financial institutions
in meeting the credit needs of their local communities, including low and
moderate income neighborhoods, consistent with the safe and sound operation of
those banks. These
-6-
factors are also considered in evaluating mergers, acquisitions, and
applications to open a branch or facility.
Insider Credit Transacitons. Banks are also subject to certain restrictions
- ---------------------------
imposed by the Federal Reserve Act on extensions of credit to executive
officers, directors, principal shareholders, or any related interest of such
persons. Extensions of credit (i) must be made on substantially the same terms,
including interest rates and collateral as, and follow credit underwriting
procedures that are not less stringent than, those prevailing at the time for
comparable transactions with persons not covered above and who are not
employees, and (ii) must not involve more than the normal risk of repayment or
present other unfavorable features. Banks are also subject to certain lending
limits and restrictions on overdrafts to insiders. A violation of these
restrictions may result in the assessment of substantial civil monetary
penalties, imposition of a cease and desist order, and other regulatory
sanctions.
Regulation of Management. Federal law (i) sets forth circumstances under which
- ------------------------
officers or directors of a bank may be removed by the institution's federal
supervisory agency; (ii) places restraints on lending by a bank to its executive
officers, directors, principal shareholders, and their related interests; (iii)
prohibits management personnel of a bank from serving as a director or in other
management positions of another financial institution whose assets exceed a
specified amount or which has an office within a specified geographic area.
FDICIA. Under the Federal Deposit Insurance Corporation Improvement Act
- ------
("FDICIA"), each federal banking agency has prescribed by regulation, non-
capital safety and soundness standards for institutions under its authority.
These standards cover internal controls, information systems and internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth, compensation, fees and benefits, such other operational and managerial
standards as the agency determines to be appropriate, and standards for asset
quality, earnings and stock valuation. An institution, which fails to meet
these standards, must develop a plan acceptable to the agency, specifying the
steps that the institution will take to meet the standards. Failure to submit
or implement such a plan may subject the institution to regulatory sanctions.
Management believes that Pacific Continental Bank meets all such standards, and
therefore does not believe that these regulatory standards materially affect the
Company's business operations.
Interstate Banking and Branching
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Act") permits nationwide interstate banking and branching under
certain circumstances. This legislation generally authorizes interstate
branching and relaxes federal law restrictions on interstate banking.
Currently, bank holding companies may purchase banks in any state, and states
may not prohibit such purchases. Additionally, banks are permitted to merge
with banks in other states as long as the home state of neither merging bank has
opted out under the legislation. The Interstate Act requires regulators to
consult with community organizations before permitting an interstate institution
to close a branch in a low-income area.
Under recent FDIC regulations, banks are prohibited from using their interstate
branches primarily for deposit production. The FDIC has accordingly implemented
a loan-to-deposit ratio screen to ensure compliance with this prohibition.
Oregon enacted "opting in" legislation in accordance with the Interstate Act
provisions allowing banks to engage in interstate merger transactions, subject
to certain "aging" requirements. Oregon restricts an out-of-state bank from
opening de novo branches. However, once an out-of-state bank has acquired a
bank within the state, either through merger or acquisition of all or
substantially all of the bank's assets, the out-of-state bank may open
additional branches within the state.
Deposit Insurance
-7-
The deposits of the Bank are currently insured to a maximum of $100,000 per
depositor through the Bank Insurance Fund ("BIF") administered by the FDIC. The
Bank is required to pay semiannual deposit insurance premium assessments to the
FDIC.
The FDICIA included provisions to reform the Federal deposit insurance system,
including the implementation of risk-based deposit insurance premiums. The
FDICIA also permits the FDIC to make special assessments on insured depository
institutions in amounts determined by the FDIC to be necessary to give it
adequate assessment income to repay amounts borrowed from the U.S. Treasury and
other sources or for any other purpose the FDIC deems necessary. The FDIC has
implemented a risk-based insurance premium system under which banks are assessed
insurance premiums based on how much risk they present to the BIF. Banks with
higher levels of capital and a low degree of supervisory concern are assessed
lower premiums than banks with lower levels of capital or a higher degree of
supervisory concern.
Dividends
The principal source of the Company's cash reserves is dividends received from
the Bank. The payment of dividends is subject to government regulation, in that
regulatory authorities may prohibit banks and bank holding companies from paying
dividends, in a manner that would constitute an unsafe or unsound banking
practice. In addition, a bank may not pay cash dividends if doing so would
reduce the amount of its capital below that necessary to meet minimum applicable
regulatory capital requirements. Oregon law also limits a bank's ability to pay
dividends.
Capital Adequacy
Federal bank regulatory agencies use capital adequacy guidelines in the
examination and regulation of bank holding companies and banks. If capital falls
below minimum guideline levels, the holding company or bank may be denied
approval to acquire or establish additional banks or nonbank businesses or to
open new facilities.
The FDIC and Federal Reserve use risk-based capital guidelines for banks and
bank holding companies. These are designed to make such capital requirements
more sensitive to differences in risk profiles among banks and bank holding
companies, to account for off-balance sheet exposure and to minimize
disincentives for holding liquid assets. Assets and off-balance sheet items are
assigned to broad risk categories, each with appropriate weights. The resulting
capital ratios represent capital as a percentage of total risk-weighted assets
and off-balance sheet items. The guidelines are minimums, and the Federal
Reserve has noted that bank holding companies contemplating significant
expansion programs should not allow expansion to diminish their capital ratios
and should maintain ratios well in excess of the minimum. The current guidelines
require all bank holding companies and federally-regulated banks to maintain a
minimum risk-based total capital ratio equal to 8%, of which at least 4% must be
Tier I capital. Tier I capital for bank holding companies includes common
shareholders' equity, certain qualifying perpetual preferred stock and minority
interests in equity accounts of consolidated subsidiaries, less intangibles.
The Federal Reserve also employs a leverage ratio, which is Tier I capital as a
percentage of total assets less intangibles, to be used as a supplement to risk-
based guidelines. The principal objective of the leverage ratio is to constrain
the maximum degree to which a bank holding company may leverage its equity
capital base. The Federal Reserve requires a minimum leverage ratio of 3%.
However, for all but the most highly rated bank holding companies and for bank
holding companies seeking to expand, the Federal Reserve expects an additional
cushion of at least 1% to 2%.
FDICIA created a statutory framework of supervisory actions indexed to the
capital level of the individual institution. Under regulations adopted by the
FDIC, an institution is assigned to one of five capital categories depending
upon its total risk-based capital ratio, Tier I risk-based capital ratio, and
leverage ratio, together with certain subjective factors. Institutions that are
deemed to be "undercapitalized"
-8-
depending on the category, to which they are assigned, are subject to certain
mandatory supervisory corrective actions.
Effects of Government Monetary Policy
The earnings and growth of the Company are affected not only by general economic
conditions, but also by the fiscal and monetary policies of the federal
government, particularly the Federal Reserve. The Federal Reserve can and does
implement national monetary policy for such purposes as curbing inflation and
combating recession, but its open market operations in U.S. government
securities, control of the discount rate applicable to borrowings from the
Federal Reserve, and establishment of reserve requirements against certain
deposits, influence the growth of bank loans, investments and deposits, and also
affect interest rates charged on loans or paid on deposits. The nature and
impact of future changes in monetary policies and their impact on the Company
cannot be predicted with certainty.
Statistical Information
The following charts present certain expanded financial information not
otherwise contained in the Company's Annual Report to Shareholders. Most of the
information is required by Guide 3, as adopted by the Securities and Exchange
Commission.
Selected Quarterly Information
The following chart contains data for the last eight quarters ending December
31, 2000. All data, except per share data, is in thousands of dollars.
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YEAR 2000 1999
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QUARTER Fourth Third Second First Fourth Third Second First
- ----------------------------------------------------------------------------------------------------------------------
Interest income $6,869 $6,881 $6,480 $6,208 $6,104 $5,740 $5,531 $5,322
Interest expense 2,350 2,491 2,303 2,032 1,839 1,640 1,579 1,585
Net interest income 4,519 4,390 4,177 4,176 4,265 4,100 3,952 3,737
Provision for loan loss 415 225 550 150 35 200 200 300
Noninterest income 1,134 1,065 879 831 1,089 948 1,103 979
Noninterest expense 3,131 2,938 3,173 2,728 2,954 2,674 2,631 2,441
Net income 1,296 1,413 793 1,306 1,453 1,342 1,364 1,215
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PER COMMON
SHARE DATA
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Net income (basic) $ 0.29 $ 0.31 $ 0.17 $ 0.29 $ 0.31 $ 0.29 $ 0.28 $ 0.25
Cash dividends 0.12 - 0.15 0.15 - 0.13 -
- ----------------------------------------------------------------------------------------------------------------------
Investment Portfolio
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The following chart contains information regarding the Company's investment
portfolio. All of the Company's investment securities are accounted for as
available-for-sale and are reported at estimated market value. The difference
between estimated fair value and amortized cost, net of deferred taxes, is a
separate component of stockholder's equity.
INVESTMENT PORTFOLIO
ESTIMATED MARKET VALUE
(dollars in thousands)
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December 31
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2000 1999 1998
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US Treasury, US Government agencies and corporations,
and agency mortgage-backed securities $34,683 $31,933 $26,693
Taxable obligations of states and political subdivisions 1,417 907 921
Other mortgage-backed securities & corporate notes 2,015 2,010 3,516
----------------------------------------------
Total $38,115 $34,850 $31,130
The following chart presents the amount of each investment category by maturity
date and includes a weighted average yield for each period. Mortgage-backed
securities have been classified based on their December 31, 2000, projected
average life.
SECURITIES AVAILABLE FOR SALE
DECEMBER 31, 2000
(dollars in thousands)
After One After Five
Year But Years But
Within Within Within After
One Year Five Years Ten Years Ten Years
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Amount Yield Amount Yield Amount Yield Amount Yield
---------------- ---------------- ----------------- -----------------
US Treasury, US
Government agencies
and agency mortgage-
backed securities - - $ 12,360 6.63% $ 2,627 6.27% $ 19,696 6.45%
Obligations of states and
Political subdivisions - - - - - - 1,417 8.87%
Other securities & corp.
notes $ 2,015 7.00% - - - - - -
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Total $ 2,015 7.00% $ 12,360 6.63% $ 2,627 6.27% $ 21,113 6.61%
-10-
Loan Portfolio
The following tables contain information related to the Company's loan
portfolio, including loans held for sale, for the five-year period ending
December 31, 2000.
LOAN PORTFOLIO
(dollars in thousands)
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December 31,
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2000 1999 1998 1997 1996
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Loan Portfolio
Commercial Loans $ 54,798 $ 56,485 $ 50,847 $ 35,475 $ 32,065
Real Estate Loans 159,481 144,869 123,427 100,351 85,440
Loans held for sale 814 2,767 6,996 5,497 2,023
Consumer Installment Loans 10,582 8,984 7,185 5,515 4,417
----------------------------------------------------------------
225,675 213,105 188,455 146,838 123,945
Deferred loan origination fees (1,081) (1,125) (1,094) (1,132) (1,002)
----------------------------------------------------------------
224,594 211,980 187,361 145,706 122,943
Allowance for loan loss (2,149) (2,448) (2,070) (1,504) (949)
----------------------------------------------------------------
$222,445 $209,532 $185,291 $144,202 $121,994
- --------------------------------------------------------------------------------------------------------------
December 31,
----------------------------------------------------------------
2000 1999 1998 1997 1996
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Nonperforming Assets
Nonaccrual loans $ 490 $ 1,422 $ 873 $ 139 $ 14
90 or more days past due and still accruing 155 464 247 655 86
----------------------------------------------------------------
Total nonperforming loans 645 1,886 1,120 794 100
Foreclosed assets 385 125 200
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Total nonperforming assets $ 1,030 $ 2,011 $ 1,120 $ 994 $ 100
Nonperforming assets as a percentage of
of total loans 0.46% 0.95% 0.60% 0.68% 0.08%
-11-
The following table presents loan portfolio information by loan category related
to maturity and repricing sensitivity. Variable rate loans are included in the
time frame in which the interest rate on the loan could be first adjusted.
Nonaccrual loans, totaling $490 are included.
MATURITY AND REPRICING DATA FOR LOANS
December 31, 2000
(dollars in thousands)
Commercial Real Estate Consumer Total
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Three months or less $ 42,373 $ 44,156 $ 4,130 $ 90,660
Over three months through 12 months 3,334 6,134 931 10,398
Over 1 year through 3 years 5,557 46,087 2,098 53,742
Over 3 years through 5 years 3,148 58,985 891 63,024
Over 5 years through 15 years 386 4,933 2,532 7,851
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Total loans $ 54,798 $ 160,295 $ 10,582 $ 225,675
Allowance for Loan Loss
The following chart presents information about the Company's allowances for loan
loss. The Company does not allocate the allowance among specific loan types or
categories. In management's opinion such allocation has limited value.
Management evaluates the allowance monthly and considers the amount to be
adequate to absorb possible loan losses.
ALLOWANCE FOR LOAN LOSS
(dollars in thousands)
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December 31,
---------------------------------------------------------------
2000 1999 1998 1997 1996
- -------------------------------------------------------------------------------------------------------------
Allowance for loan losses
Balance at beginning of year $ 2,448 $ 2,070 $ 1,504 $ 949 $ 807
Charges to the allowance
Real estate loans (336) (248) (0) (84) (0)
Consumer installment loans (208) (80) (57) (74) (41)
Commercial (1,185) (49) (256) (125) (125)
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Total charges to the allowance (1,729) (377) (313) (283) (166)
Recoveries 90 20 69 108 18
Provisions 1,340 735 810 730 290
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Balance at end of the year $ 2,149 $ 2,448 $ 2,070 $ 1,504 $ 949
Net charge offs as a percentage of total
average loans 0.72% 0.18% 0.15% 0.12% 0.13%
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Deposits
Deposits represent a significant portion of the Company's liabilities. Average
balance and average rates paid by category of deposit is included in Table I,
Average Balance Analysis of Net Interest Earnings, within the Company's
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" incorporated by reference. The chart below details the Company's
time deposits at December 31, 2000. The Company does not have any foreign
deposits. Variable rate deposits are listed by first repricing opportunity.
TIME DEPOSITS
(dollars in thousands)
Time Deposits Time Deposits
of $100,000 of less than Total
or more $100,000 Time Deposits
-------------------------------------------------------
Three months or less $ 6,045 $ 11,860 $ 17,905
Over three months through twelve months 20,332 10,528 30,860
Over one year through three years 1,099 3,228 4,327
Over three years 0 692 692
-------------------------------------------------------
$ 27,476 $ 26,308 $ 53,784
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Short-term Borrowings
The Company uses short-term borrowings to fund fluctuations in deposits and loan
demand. The Company's only subsidiary, Pacific Continental Bank, has access to
both secured and unsecured overnight borrowing lines. At December 31, 2000,
available unsecured borrowing lines with various correspondent banks totaled
$29,000. The Federal Home Loan Bank of Seattle (FHLB) also provides a secured
overnight borrowing line using a blanket pledge of various Bank assets. The
Bank's FHLB borrowing limit, subject to sufficient collateral and stock
investment, was approximately $44,000 at December 31, 2000.
SHORT TERM BORROWINGS
(dollars in thousands)
2000 1999 1998
--------------------------------------------
Federal Funds Purchased
Average interest rate
At year end 7.00% 5.97% 4.55%
For the year 6.50% 5.29% 5.69%
Average amount outstanding for the year $ 5,762 $ 7,786 $ 6,274
Maximum amount outstanding at any month end $ 12,500 $ 11,200 $ 12,500
Amount outstanding at year end $ 900 $ 5,800 $ 8,600
ITEM 2 Properties
- --------------------
The principal properties of the registrant are comprised of the banking
facilities owned by the Bank. The Bank operates nine full service facilities and
one limited service facility. The Bank and Bank subsidiaries own a total of six
buildings and owns the land under four of the buildings. Significant properties
owned by the Bank are as follows:
1) Three-story building with approximately 30,000 square feet located on Olive
Street in Eugene, Oregon. The Bank occupies the first two floors and a
portion of the third floor. The remainder of the third floor is leased to
various tenants. The building is on leased land.
2) Building with approximately 4,000 square feet located on West 11/th/ Avenue
in Eugene, Oregon. The building is on leased land.
3) Building and land with approximately 8,000 square feet located on High
Street in Eugene, Oregon.
4) Three-story building and land with approximately 31,000 square feet located
in the Gateway area of Springfield, Oregon. The Bank occupies approximately
5,500 square feet of the first floor and leases out or is seeking to lease
out the remaining space.
5) Building and land with approximately 3,500 square feet located in
Beaverton, Oregon.
6) Building and land with approximately 2,000 square feet located in Junction
City, Oregon.
The Bank leases facilities for one branch office in Tualatin, Oregon, one
limited service office in Halsey, Oregon, and two branch offices located in
Eugene, Oregon. In addition, the Bank leases a portion of an adjoining building
to the High Street office for administrative functions.
ITEM 3 Legal Proceedings
- ---------------------------
As of the date of this report, neither the Company nor the Bank is party to any
material pending legal proceedings, including proceedings of governmental
authorities, other than ordinary routine litigation incidental to the business
of the Bank.
ITEM 4 Submission of Matters to a Vote of Security Holders
- -------------------------------------------------------------
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There were no matters submitted to a vote of security holders during the fourth
quarter of 2000.
PART II
-------
ITEM 5 Market for Registrant's Common Equity and Related Stockholder Matters
- -------------------------------------------------------------------------------
Effective June 1, 2000, Pacific Continental Corporation commenced common stock
trades on the NASDAQ National Market under the symbol PCBK. Prior to that time,
the common stock traded on the NASDAQ OTC Bulletin Board. The primary market
makers currently are Pacific Crest Securities and Ragen MacKenzie, Inc. At
January 31, 2001, the Company had 4,535,751, shares of common stock outstanding
held by approximately 1,224 shareholders.
The high, low and closing sales prices for the last eight quarters are shown in
the table below.
- -------------------------------------------------------------------------------------------------------------------
YEAR 2000 1999
------------------------------------ -------------------------------------
QUARTER Fourth Third Second First Fourth Third Second First
- ---------------------------------------------------------------------- -------------------------------------
Market value:
High $9.13 $10.88 $11.75 $13.75 $14.00 $16.38 $15.50 $17.50
Low 8.75 9.00 9.75 11.50 12.75 13.75 13.00 14.00
Close 8.88 9.13 10.88 11.88 13.00 14.00 13.75 15.38
The Company has a history of paying semi-annual cash dividends, typically in
June and December. A history of cash dividends declared and paid is included in
Item 1: Business, under the section titled "Selected Quarterly Information".
-15-
ITEM 6 Selected Financial Data
- ---------------------------------
The information regarding "Selected Financial Data" is incorporated by reference
from portions of the Company's 2000 Annual Report to Shareholders, which are
included in Exhibit 13 to this report.
ITEM 7 Management's Discussion and Analysis of Financial Condition and
- -------------------------------------------------------------------------
Results of Operations
- ---------------------
The information regarding "Management's Discussion and Analysis of Financial
Condition and Results of Operations" is incorporated by reference from portions
of the Company's 2000 Annual Report to Shareholders, which are included in
Exhibit 13 to this report.
ITEM 7A Quantitative and Qualitative Disclosures About Market Risk
- --------------------------------------------------------------------
The information regarding "Quantitative and Qualitative Disclosures About Market
Risk" is incorporated by reference from portions of the Company's 2000 Annual
Report to Shareholders, which are included in Exhibit 13 to this report.
ITEM 8 Financial Statements and Supplementary Data
- -----------------------------------------------------
The information regarding "Financial Statements and Supplementary Data" is
incorporated by reference from portions of the Company's 2000 Annual Report to
Shareholders, which are included in Exhibit 13 to this report.
ITEM 9 Changes In and Disagreements with Accountants on Accounting and
- -------------------------------------------------------------------------
Financial Disclosure
- --------------------
None
PART III
- --------
ITEM 10 Directors and Executive Officers of the Registrant
- ------------------------------------------------------------
The information regarding "Directors and Executive Officers of the Registrant"
of the Bank is incorporated by reference from the sections entitled "PROPOSAL
NO. 1 - ELECTION OF DIRECTORS--Nominees and Continuing Directors," "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" and "COMPLIANCE WITH
SECTION 16(a) FILING REQUIREMENTS" of the Company's 2001 Annual Meeting Proxy
Statement (the "Proxy Statement").
ITEM 11 Executive Compensation
- --------------------------------
The information regarding "Executive Compensation" is incorporated by reference
from the sections entitled "INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS
COMMITTEES--Compensation of Directors," and "EXECUTIVE COMPENSATION" of the
Proxy Statement.
ITEM 12 Security Ownership of Certain Beneficial Owners and Management
- ------------------------------------------------------------------------
The information regarding "Security Ownership of Certain Beneficial Owners and
Management" is incorporated by reference from the sections entitled "PROPOSAL
NO. 1 - ELECTION OF
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DIRECTORS--Nominees and Continuing Directors," and "SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" of the Proxy Statement.
ITEM 13 Certain Relationships and Related Transactions
- --------------------------------------------------------
The information regarding "Certain Relationships and Related Transactions" is
incorporated by reference from the section entitled "TRANSACTIONS WITH
MANAGEMENT" of the Proxy Statement.
PART IV
- -------
ITEM 14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- --------------------------------------------------------------------------
(a)(1) Financial Statements
Financial Statements are incorporated by reference to the Bank's Annual Report
to Shareholders for the fiscal year ended December 31, 2000, included as part of
exhibit 13 to this Report.
(a)(2) Financial Statement Schedules
All other schedules to the financial statements required by Regulation S-X are
omitted because they are not applicable, not material, or because the
information is included in the financial statements or related notes
(a)(3) Exhibit Index
Exhibit
13.1 Selected Financial Data, Management's Discussion and Analysis, and Audited
Financial Statements And Notes from the Company's 2000 Annual Report to
Shareholders
23.1 Accountants Consent of Zirkle Long & Triguiero LLC
(b) Reports on Form 8-K
None
-17-
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned on March 15, 2001.
PACIFIC CONTINENTAL CORPORATION
(Registrant)
By: /s/ J. Bruce Riddle
--------------------------------------
J. Bruce Riddle
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on the 15th day of March 2001.
Principal Executive Officer
By /s/ J. Bruce Riddle President and Chief Executive Officer
-------------------------
J. Bruce Riddle and Director
Principal Financial and Accounting Officer
By /s/ Michael A. Reynolds Vice President and
-------------------------
Michael A. Reynolds Controller
Remaining Directors
By /s/ Robert A. Ballin Director and
-------------------------
Robert A. Ballin Chairman of the Board
By /s/ Donald G. Montgomery Director
-------------------------
Donald G. Montgomery
By /s/ Donald A. Bick Director By James W. Putney Director
------------------------- --------------------
Donald A. Bick James W. Putney
By /s/ Larry G. Campbell Director By /s/ Ronald F. Taylor Director
------------------------- ---------------------
Larry G. Campbell Ronald F. Taylor
By /s/ Michael Holcomb Director
-------------------------
Michael Holcomb
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