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8-K - FORM 8-K - PACIFIC CONTINENTAL CORPd613236d8k.htm

Exhibit 99.1

NEWS RELEASE

 

FOR MORE INFORMATION CONTACT:    Hal Brown    Mick Reynolds
   CEO    Executive Vice President/CFO
   541-686-8685    541-686-8685
   www.therightbank.com
   Email: banking@therightbank.com

FOR IMMEDIATE RELEASE

Pacific Continental Corporation Reports Third Quarter 2013 Results

Loan Growth and Interest Recoveries Drive Earnings

EUGENE, Ore., October 16, 2013 – Pacific Continental Corporation (Nasdaq: PCBK), the holding company of Pacific Continental Bank, today reported financial results for the third quarter 2013.

Recent highlights:

 

    Net income $3.9 million or $0.22 per diluted share.

 

    Organic loan growth continued for seventh consecutive quarter.

 

    Period-end core deposits totaled $1 billion.

 

    Net loan recoveries recorded during the quarter.

 

    Declared fourth quarter 2013 quarterly cash dividend of $0.10 per share, an increase of $0.01 over the prior quarter, and special cash dividend of $0.12 per share.

 

    Total risk-based capital ratio of 16.42%, significantly above the 10.00% minimum for “well-capitalized” designation.

 

    Recognized by the Nonprofit Network of Southwest Washington with the Nonprofit Excellence in Corporate Community Support Award.

Net income

Net income for third quarter 2013 was $3.9 million or $0.22 per diluted share compared to net income of $3.4 million or $0.19 per diluted share in third quarter 2012. Included in the period were loan recoveries and interest recoveries, on two loans, totaling $613 thousand and $982 thousand, respectively. Also included in the period was a $728 thousand write down on a commercial land development property held in other real estate. Return on average assets, average book equity, and average tangible equity were 1.09%, 8.77%, and 10.12%, respectively, in third quarter 2013, compared to 1.03%, 7.52%, and 8.56% for the same quarter last year.

“We are pleased with the recent quarter and year-to-date results that reflect the excellent work of all departments within the bank,” said Hal Brown, chief executive officer. “Loan and deposit growth strongly supported the board’s decision to increase our regular dividend,” added Brown.

Loan growth

Outstanding gross loans at September 30, 2013, were $978.7 million, up $18.2 million over the prior quarter end and up $141.7 million from third quarter 2012. After removing the loans acquired in the Century Bank transaction, organic loan growth for the first nine months of 2013 was $59.7 million representing an annualized growth rate of 9.15%. Loan growth for the third quarter was primarily centered in construction lending and commercial loans. At September 30, 2013, loans to dental professionals totaled $303.9 million representing 31.05% of the total loan portfolio. Outstanding loans to dental professionals grew 12.23% during the first nine months of 2013 and 23.74% over September 30, 2012. National dental lending at September 30, 2013, totaled $122.5 million, up $20.2 million during the third quarter.


“We are pleased to report that the sustained loan growth has been attributable to long standing commercial clients who are now taking advantage of the improving economy, combined with our strong health care referral network and concerted calling efforts on the part of our bankers,” said Roger Busse, president and chief operating officer. “While competition for loans continues, we anticipate that our strong loan pipelines should lead to continued growth,” added Busse.

Core deposit growth accelerates

Period-end Company-defined core deposits at September 30, 2013, were $1.0 billion and represented an increase of $56.9 million from the prior quarter end, reflecting the typical seasonal growth pattern during the last half of the year. At period-end September 30, 2013, noninterest-bearing demand deposits totaled $379.6 million and represented 37.37% of core deposits. Century Bank core deposit retention remained strong with September 30, 2013 balances at 94.31% of the February 1, 2013 acquisition total.

Net interest margin

The third quarter 2013 net interest margin, on a tax equivalent basis, was 4.58%, representing a linked-quarter increase of 38 basis points from second quarter 2013, and an increase of 42 basis points from third quarter 2012. Included in the third quarter net interest margin was $982 thousand of interest recoveries, which contributed 30 basis points to the third quarter margin. In addition, the accretion of the Century Bank loan fair value market adjustment positively impacted the net interest margin by 5 basis points.

Classified assets, provisioning and loan statistics

At September 30, 2013, classified assets totaled $54.5 million and represented 30.25% of regulatory capital, compared to $56.1 million and 31.18% of regulatory capital at December 31, 2012. Classified asset levels were temporarily increased by $5.8 million as a result of the Century Bank acquisition. Third quarter 2013 classified assets were lower than pre-acquisition levels.

Nonperforming assets, a subcategory of classified assets, totaled $21.8 million at September 30, 2013, or 1.50% of total assets, a decrease from December 31, 2012, and September 30, 2012, ratios of 1.92% and 2.14%, respectively. Nonperforming assets were comprised of $5.2 million of nonperforming loans, net of government guarantees, and $16.6 million in other real estate owned. Loans past-due 30-89 days were 0.37% of total loans at September 30, 2013, compared to 0.30% at December 31, 2012. This is the seventeenth consecutive quarter in which this ratio was near or below one percent.

Classified dental loans totaled 2.16% of total dental loans with net charge offs of $377 thousand through September 30, 2013. National dental lending statistics remain positive with no loans past due, and 0.60% of the national dental lending portfolio considered classified.

“Principal and interest recoveries of more than $1.7 million during the quarter reflected the successful efforts of our legal and special assets teams who diligently work on problem loan collection well after loan charge offs occurred,” said Casey Hogan, executive vice president and chief credit officer.

The Company made no provision for loan losses during the third quarter 2013, with quarter to date net recoveries of $499 thousand. The allowance for loan losses as a percentage of outstanding loans at September 30, 2013, was 1.72% compared to 1.88% at December 31, 2012, and 1.95% at September 30, 2012. The allowance for loan losses as a percentage of total nonperforming loans, net of government guarantees, improved to 325.94% at September 30, 2013, from 167.87% reported one year ago, reflecting both a reduction in nonperforming loans and an overall general improvement in the quality of the loan portfolio.


Capital levels

The Company’s capital ratios continued to be well above the minimum FDIC “well-capitalized” designated levels. At September 30, 2013, the Company’s Tier 1 leverage ratio, Tier 1 risk-based capital ratio, and Total risk-based capital ratios were 11.56%, 15.16% and 16.42%, respectively, as compared to 12.53%, 17.37% and 18.62% at September 30, 2012, reflecting improved capital leverage. The FDIC’s minimum “well-capitalized” ratios are 5.00%, 6.00% and 10.00%, respectively.

In February 2013, the Company’s board of directors authorized a stock repurchase plan. The plan authorizes the repurchase up to 892,000 shares or five percent of the Company’s outstanding shares. The plan commenced on April 1, 2013, with purchases to occur over a 12-month period. No shares were repurchased under the plan.

Noninterest income and expense

Noninterest income for the third quarter was $1.4 million, up $32 thousand over third quarter 2012, reflecting a small increase in both service charge and bankcard income. Noninterest expense in third quarter 2013 was up $1.7 million over third quarter 2012, with a portion of the increase centered in other real estate expense, which includes the effects of the $728 thousand third quarter other real estate write down. In addition, compensation and business development expenses were up, reflecting the addition of business development personnel who have increased calling efforts during 2013 as evidenced by the Bank’s loan growth. The third quarter efficiency ratio was 63.82% compared to 62.70% for third quarter 2012.

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 third quarter 2013 on Thursday, October 17, 2013, at 11:00 a.m. Pacific / 2:00 p.m. Eastern. To listen to the conference call, interested parties should call 866-292-1418. 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 fourteen banking offices in Oregon and Washington. The Bank also operates loan production offices in Tacoma, Washington and Denver, Colorado. Pacific Continental, with $1.4 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” “anticipates” 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 growth, capital strategy, future classified and problem asset migration and credit quality trends and economic conditions generally. 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 our significant concentration in loans to dental professionals; 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 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     Nine months ended  
     September 30,     September 30,     September 30,     September 30,  
     2013     2012     2013     2012  

Interest and dividend income

        

Loans

   $ 14,028      $ 11,971      $ 39,793      $ 36,089   

Taxable securities

     1,489        1,490        4,164        4,886   

Tax-exempt securities

     488        420        1,430        1,162   

Federal funds sold & interest-bearing deposits with banks

     2        2        7        4   
  

 

 

   

 

 

   

 

 

   

 

 

 
     16,007        13,883        45,394        42,141   
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense

        

Deposits

     801        992        2,586        3,149   

Federal Home Loan Bank & Federal Reserve borrowings

     292        364        905        1,259   

Junior subordinated debentures

     51        38        140        116   

Federal funds purchased

     5        4        12        20   
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,149        1,398        3,643        4,544   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

     14,858        12,485        41,751        37,597   

Provision for loan losses

     —          —          250        1,900   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after provision for loan losses

     14,858        12,485        41,501        35,697   
  

 

 

   

 

 

   

 

 

   

 

 

 

Noninterest income

        

Service charges on deposit accounts

     487        463        1,436        1,359   

Other fee income, principally bankcard

     432        408        1,217        1,205   

Mortgage banking income

     —          —          —          72   

Bank-owned life insurance income

     131        157        387        432   

Loss on sale of investment securities

     —          —          (8     —     

Impairment losses on investment securities (OTTI)

     —          —          (16     —     

Other noninterest income

     397        387        1,248        1,290   
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,447        1,415        4,264        4,358   
  

 

 

   

 

 

   

 

 

   

 

 

 

Noninterest expense

        

Salaries and employee benefits

     5,541        4,720        16,344        14,721   

Premises and equipment

     919        838        2,746        2,553   

Data processing

     659        538        1,954        1,543   

Legal and professional fees

     421        435        1,460        1,378   

Business development

     421        376        1,375        1,088   

FDIC insurance assessment

     231        285        674        814   

Bankcard processing

     150        147        418        440   

Other real estate expense

     1,185        466        1,762        1,082   

Merger related expenses (1)

     —          —          1,246        —     

Other noninterest expense

     879        910        2,708        2,579   
  

 

 

   

 

 

   

 

 

   

 

 

 
     10,406        8,715        30,687        26,198   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before provision for income taxes

     5,899        5,185        15,078        13,857   

Provision for income taxes

     1,959        1,747        4,963        4,587   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 3,940      $ 3,438      $ 10,115      $ 9,270   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share:

        

Basic

   $ 0.22      $ 0.19      $ 0.57      $ 0.51   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.22      $ 0.19      $ 0.56      $ 0.51   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

        

Basic

     17,888,182        17,978,081        17,865,582        18,166,377   

Common stock equivalents attributable to stock-based awards

     221,100        152,964        191,046        152,957   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     18,109,282        18,131,045        18,056,628        18,319,334   
  

 

 

   

 

 

   

 

 

   

 

 

 

PERFORMANCE RATIOS

        

Return on average assets

     1.09     1.03     0.95     0.95

Return on average equity (book)

     8.77     7.52     7.46     6.85

Return on average equity (tangible) (2)

     10.12     8.56     8.58     7.81

Net interest margin (3)

     4.58     4.16     4.36     4.28

Efficiency ratio (4)

     63.82     62.70     66.69     62.44

 

(1) Represents expenses associated with the acquisition of Century Bank.
(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 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)

 

     September 30,
2013
    December 31,
2012
    September 30,
2012
 

ASSETS

      

Cash and due from banks

   $ 42,555      $ 28,607      $ 20,840   

Interest-bearing deposits with banks

     54        94        53   
  

 

 

   

 

 

   

 

 

 

Total cash and cash equivalents

     42,609        28,701        20,893   

Securities available-for-sale

     347,506        389,885        406,175   

Loans, less allowance for loan losses and net deferred fees

     960,916        854,071        819,922   

Interest receivable

     4,608        4,520        4,861   

Federal Home Loan Bank stock

     10,523        10,462        10,557   

Property and equipment, net of accumulated depreciation

     19,116        19,238        19,478   

Goodwill and intangible assets

     23,710        22,031        22,068   

Deferred tax asset

     9,438        6,230        6,803   

Taxes receivable

     130        —          —     

Other real estate owned

     16,602        17,972        19,235   

Prepaid FDIC assessment

     —          1,746        1,998   

Bank-owned life insurance

     16,008        15,621        15,469   

Other assets

     3,712        3,010        2,963   
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 1,454,878      $ 1,373,487      $ 1,350,422   
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

      

Deposits

      

Noninterest-bearing demand

   $ 379,598      $ 329,825      $ 304,016   

Savings and interest-bearing checking

     565,204        554,693        520,218   

Time $100,000 and over

     81,569        73,610        77,790   

Other time

     91,158        88,026        78,138   
  

 

 

   

 

 

   

 

 

 

Total deposits

     1,117,529        1,046,154        980,162   

Federal funds and overnight funds purchased

     —          11,570        9,385   

Federal Home Loan Bank borrowings

     145,000        118,000        165,000   

Junior subordinated debentures

     8,248        8,248        8,248   

Accrued interest and other payables

     4,423        6,134        4,848   
  

 

 

   

 

 

   

 

 

 

Total liabilities

     1,275,200        1,190,106        1,167,643   
  

 

 

   

 

 

   

 

 

 

Shareholders’ equity

      

Common stock: 50,000,000 shares authorized. Shares issued and outstanding: 17,888,251 at September 30, 2013, 17,835,088 at December 31, 2012 and 17,900,188 at September 30, 2012

     133,597        133,017        133,385   

Retained earnings

     45,533        44,533        43,113   

Accumulated other comprehensive income

     548        5,831        6,281   
  

 

 

   

 

 

   

 

 

 
     179,678        183,381        182,779   
  

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 1,454,878      $ 1,373,487      $ 1,350,422   
  

 

 

   

 

 

   

 

 

 

CAPITAL RATIOS

      

Total capital (to risk weighted assets)

     16.42     18.15     18.62

Tier I capital (to risk weighted assets)

     15.16     16.90     17.37

Tier I capital (to leverage assets)

     11.56     12.33     12.53

Tangible common equity (to tangible assets) (1)

     10.90     11.94     12.10

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

     14.47     16.67     17.18

OTHER FINANCIAL DATA

      

Shares outstanding at end of period

     17,888,251        17,835,088        17,900,188   

Tangible shareholders’ equity (1)

   $ 155,968      $ 161,350      $ 160,711   

Book value per share

   $ 10.04      $ 10.28      $ 10.21   

Tangible book value per share

   $ 8.72      $ 9.05      $ 8.98   

 

(1)  Tangible common 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)

 

     September 30,
2013
    December 31,
2012
    September 30,
2012
 

LOANS BY TYPE

      

Real estate secured loans:

      

Permanent loans:

      

Multi-family residential

   $ 47,795      $ 45,212      $ 43,080   

Residential 1-4 family

     49,206        51,437        53,556   

Owner-occupied commercial

     244,828        219,276        222,374   

Nonowner-occupied commercial

     164,708        145,315        140,104   
  

 

 

   

 

 

   

 

 

 

Total permanent real estate loans

     506,537        461,240        459,114   

Construction loans:

      

Multi-family residential

     22,929        17,022        12,794   

Residential 1-4 family

     29,880        20,390        18,108   

Commercial real estate

     24,106        23,235        15,817   

Commercial bare land and acquisition & development

     11,191        10,668        9,887   

Residential bare land and acquisition & development

     7,053        8,405        9,108   
  

 

 

   

 

 

   

 

 

 

Total construction real estate loans

     95,159        79,720        65,714   

Total real estate loans

     601,696        540,960        524,828   

Commercial loans

     372,129        325,604        306,870   

Consumer loans

     3,660        3,581        3,941   

Other loans

     1,188        1,112        1,334   
  

 

 

   

 

 

   

 

 

 

Gross loans

     978,673        871,257        836,973   

Deferred loan origination fees

     (955     (841     (768
  

 

 

   

 

 

   

 

 

 
     977,718        870,416        836,205   

Allowance for loan losses

     (16,802     (16,345     (16,283
  

 

 

   

 

 

   

 

 

 
   $ 960,916      $ 854,071      $ 819,922   
  

 

 

   

 

 

   

 

 

 

 

     Three months ended     Nine months ended  
     September 30,
2013
    September 30,
2012
    September 30,
2013
    September 30,
2012
 

ALLOWANCE FOR LOAN LOSSES

        

Balance at beginning of period

   $ 16,303      $ 16,175      $ 16,346      $ 14,941   

Provision for loan losses

     —          —          250        1,900   

Loan charge offs

     (221     (1,140     (1,049     (2,809

Loan recoveries

     720        1,248        1,255        2,251   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net recoveries (charge offs)

     499        108        206        (558
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 16,802      $ 16,283      $ 16,802      $ 16,283   
  

 

 

   

 

 

   

 

 

   

 

 

 


PACIFIC CONTINENTAL CORPORATION

Selected Other Financial Information and Ratios

(In thousands)

(Unaudited)

 

     Three months ended     Nine months ended  
     September 30,
2013
    September 30,
2012
    September 30,
2013
    September 30,
2012
 

BALANCE SHEET AVERAGES

        

Loans(1)

   $ 974,775      $ 832,845      $ 949,531      $ 828,283   

Allowance for loan losses

     (16,403     (16,151     (16,419     (16,002
  

 

 

   

 

 

   

 

 

   

 

 

 

Loans, net of allowance

     958,372        816,694        933,112        812,281   

Securities and short-term deposits

     351,536        399,224        371,495        379,338   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earning assets

     1,309,908        1,215,918        1,304,607        1,191,619   

Noninterest-earning assets

     125,349        111,159        124,062        111,707   
  

 

 

   

 

 

   

 

 

   

 

 

 

Assets

   $ 1,435,257      $ 1,327,077      $ 1,428,669      $ 1,303,326   
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest-bearing core deposits (2)

   $ 625,795      $ 579,469      $ 633,338      $ 578,648   

Noninterest-bearing core deposits (2)

     346,692        300,091        327,643        290,847   
  

 

 

   

 

 

   

 

 

   

 

 

 

Core deposits (2)

     972,487        879,560        960,981        869,495   

Noncore interest-bearing deposits

     105,408        99,852        108,363        92,827   
  

 

 

   

 

 

   

 

 

   

 

 

 

Deposits

     1,077,895        979,412        1,069,344        962,322   

Borrowings

     174,973        161,215        174,217        156,001   

Other noninterest-bearing liabilities

     4,144        4,606        3,911        4,252   
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities

     1,257,012        1,145,233        1,247,472        1,122,575   
  

 

 

   

 

 

   

 

 

   

 

 

 

Shareholders’ equity (book)

     178,245        181,844        181,197        180,751   
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and equity

   $ 1,435,257      $ 1,327,077      $ 1,428,669      $ 1,303,326   
  

 

 

   

 

 

   

 

 

   

 

 

 

Shareholders’ equity (tangible)(3)

   $ 154,519      $ 159,756      $ 157,657      $ 158,598   
  

 

 

   

 

 

   

 

 

   

 

 

 

SELECTED MARKET DATA

        

Eugene market gross loans, period-end

   $ 324,320      $ 240,013       

Portland market gross loans, period-end

     390,014        375,234       

Seattle market gross loans, period-end

     136,178        151,745       

National health care gross loans, period-end (4)

     128,161        69,981       
  

 

 

   

 

 

     

Total gross loans, period-end

   $ 978,673      $ 836,973       
  

 

 

   

 

 

     

Eugene market core deposits, period-end (2)

   $ 596,403      $ 512,842       

Portland market core deposits, period-end (2)

     256,710        226,576       

Seattle market core deposits, period-end (2)

     162,538        143,196       
  

 

 

   

 

 

     

Total core deposits, period-end(2)

     1,015,651        882,614       

Other deposits, period-end

     101,878        97,548       
  

 

 

   

 

 

     

Total

   $ 1,117,529      $ 980,162       
  

 

 

   

 

 

     

Eugene market core deposits, average (2)

   $ 589,123      $ 508,927       

Portland market core deposits, average (2)

     240,612        229,913       

Seattle market core deposits, average (2)

     142,752        140,720       
  

 

 

   

 

 

     

Total core deposits, average (2)

     972,487        879,560       

Other deposits, average

     105,408        99,852       
  

 

 

   

 

 

     

Total

   $ 1,077,895      $ 979,412       
  

 

 

   

 

 

     

NET INTEREST MARGIN RECONCILIATION

        

Yield on average loans

     5.81     5.83     5.70     5.93

Yield on average securities (5)

     2.53     2.13     2.29     2.35
  

 

 

   

 

 

   

 

 

   

 

 

 

Yield on average earning assets (5)

     4.93     4.62     4.73     4.79

Rate on average interest-bearing core deposits

     0.33     0.45     0.35     0.49

Rate on average interest-bearing non-core deposits

     1.08     1.34     1.16     1.46
  

 

 

   

 

 

   

 

 

   

 

 

 

Rate on average interest-bearing deposits

     0.43     0.58     0.47     0.63

Rate on average borrowings

     0.79     1.00     0.81     1.19
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of interest-bearing funds

     0.50     0.66     0.53     0.73
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest rate spread (5)

     4.42     3.96     4.20     4.06
  

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin (5)

     4.58     4.16     4.36     4.28
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)  Includes loans held-for-sale.
(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)  Tangible equity excludes goodwill and core deposit intangible assets related to acquisitions.
(4) National health care loans include loans to heath 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.
(5)  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 $263 and $266 for the three months ended September 30, 2013, and September 30, 2012, respectively and $770 thousand, and $625 thousand for the nine months ended September 30, 2013, and September 30, 2012, respectively.


PACIFIC CONTINENTAL CORPORATION

Nonperforming Assets and Asset Quality Ratios

(In thousands)

(Unaudited)

 

     September 30,
2013
    December 31,
2012
    September 30,
2012
 

NONPERFORMING ASSETS

      

Non-accrual loans

      

Real estate secured loans:

      

Permanent loans:

      

Multi-family residential

   $ —        $ —        $ —     

Residential 1-4 family

     1,206        1,140        2,517   

Owner-occupied commercial

     2,235        3,805        3,624   

Nonowner-occupied commercial

     139        —          —     
  

 

 

   

 

 

   

 

 

 

Total permanent real estate loans

     3,580        4,945        6,141   

Construction loans:

      

Multi-family residential

     —          —          —     

Residential 1-4 family

     —          —          —     

Commercial real estate

     —          —          —     

Commercial bare land and acquisition & development

     —          —          —     

Residential bare land and acquisition & development

     —          101        104   
  

 

 

   

 

 

   

 

 

 

Total construction real estate loans

     —          101        104   
  

 

 

   

 

 

   

 

 

 

Total real estate loans

     3,580        5,046        6,245   

Commercial loans

     2,361        4,315        4,578   
  

 

 

   

 

 

   

 

 

 

Total nonaccrual loans

     5,941        9,361        10,823   

90-days past due and accruing interest

     —          —          —     

Total nonperforming loans

     5,941        9,361        10,823   
  

 

 

   

 

 

   

 

 

 

Nonperforming loans guaranteed by government

     (786     (905     (1,123

Net nonperforming loans

     5,155        8,456        9,700   
  

 

 

   

 

 

   

 

 

 

Other real estate owned

     16,602        17,972        19,235   
  

 

 

   

 

 

   

 

 

 

Total nonperforming assets, net of guaranteed loans

   $ 21,757      $ 26,428      $ 28,935   
  

 

 

   

 

 

   

 

 

 

ASSET QUALITY RATIOS

      

Allowance for loan losses as a percentage of total loans outstanding

     1.72     1.88     1.95

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

     325.94     193.29     167.87

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

     -0.03     0.06     0.09

Net nonperforming loans as a percentage of total loans

     0.53     0.97     1.16

Nonperforming assets as a percentage of total assets

     1.50     1.92     2.14

Consolidated classified asset ratio (1)

     30.25     31.18     32.43

Past due as a percentage of total loans (2)

     0.37     0.30     0.47

 

(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.
(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

Aged Analysis of Loans Receivable (Unaudited)

(In thousands)

As of September 30, 2013

 

     30-59 Days
Past Due
Still Accruing
     60-89 Days
Past Due
Still Accruing
     Greater
Than 90 Days
Past Due
Still Accruing
     Nonaccrual      Total Past
Due and
Nonaccrual
     Total
Current
     Total Loans
Receivable
 

Real estate loans

                    

Multi-family residential

   $ —         $ —         $ —         $ —         $ —         $ 47,795       $ 47,795   

Residential 1-4 family

     —           —           —           1,206         1,206         48,000         49,206   

Owner-occupied commercial

     166         166         —           2,235         2,567         242,261         244,828   

Nonowner-occupied commercial

     1,096         559         —           139         1,794         162,914         164,708   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total real estate loans

     1,262         725         —           3,580         5,567         500,970         506,537   

Construction

                    

Multi-family residential

     —           —           —           —           —           22,929         22,929   

Residential 1-4 family

     —           —           —           —           —           29,880         29,880   

Commercial real estate

     —           —           —           —           —           24,106         24,106   

Commercial bare land and acquisition & development

     —           —           —           —           —           11,191         11,191   

Residential bare land and acquisition & development

     —           —           —           —           —           7,053         7,053   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total construction loans

     —           —           —           —           —           95,159         95,159   

Commercial and other

     1,292         325         —           2,361         3,978         369,339         373,317   

Consumer

     5         —           —           —           5         3,655         3,660   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 2,559       $ 1,050       $ —         $ 5,941       $ 9,550       $ 969,123       $ 978,673   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

PACIFIC CONTINENTAL CORPORATION

Aged Analysis of Loans Receivable (Unaudited)

(In thousands)

As of September 30, 2012

 

     30-59 Days
Past Due
Still Accruing
     60-89 Days
Past Due
Still Accruing
     Greater
Than 90 Days
Past Due
Still Accruing
     Nonaccrual      Total Past
Due and
Nonaccrual
     Total
Current
     Total Loans
Receivables
 

Real estate loans

                    

Multi-family residential

   $ —         $ —         $ —         $ —         $ —         $ 43,080       $ 43,080   

Residential 1-4 family

     208         —           —           2,517         2,725         50,831         53,556   

Owner-occupied commercial

     —           340         —           3,624         3,964         218,410         222,374   

Nonowner-occupied commercial

     92         —           —           —           92         140,012         140,104   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total real estate loans

     300         340         —           6,141         6,781         452,333         459,114   

Construction

                    

Multi-family residential

     —           —           —           —           —           12,794         12,794   

Residential 1-4 family

     192         —           —           —           192         17,916         18,108   

Commercial real estate

     1,598         —           —           —           1,598         14,219         15,817   

Commercial bare land and acquisition & development

     —           —           —           —           —           9,887         9,887   

Residential bare land and acquisition & development

     —           —           —           104         104         9,004         9,108   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total construction loans

     1,790         —           —           104         1,894         63,820         65,714   

Commercial and other

     1,508         —           —           4,578         6,086         302,118         308,204   

Consumer

     5         —           —           —           5         3,936         3,941   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 3,603       $ 340       $ —         $ 10,823       $ 14,766       $ 822,207       $ 836,973   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


PACIFIC CONTINENTAL CORPORATION

Credit Quality Indicators (Unaudited)

(In thousands)

As of September 30, 2013

 

     Loan Grade         
     Pass      Special Mention      Substandard      Doubtful      Total  

Real estate loans

              

Multi-family residential

   $ 46,487       $ —         $ 1,308       $ —         $ 47,795   

Residential 1-4 family

     40,181         —           9,025         —           49,206   

Owner-occupied commercial

     239,091         —           5,737         —           244,828   

Nonowner-occupied commercial

     158,944         —           5,764         —           164,708   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total real estate loans

     484,703         —           21,834         —           506,537   

Construction

              

Multi-family residential

     22,929         —           —           —           22,929   

Residential 1-4 family

     29,683         —           197         —           29,880   

Commercial real estate

     22,548         —           1,558         —           24,106   

Commercial bare land and acquisition & development

     10,980         —           211         —           11,191   

Residential bare land and acquisition & development

     4,475         —           2,578         —           7,053   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total construction loans

     90,615         —           4,544         —           95,159   

Commercial and other

     360,749         —           12,551         17         373,317   

Consumer

     3,630         —           30         —           3,660   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 939,697       $ —         $ 38,959       $ 17       $ 978,673   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

PACIFIC CONTINENTAL CORPORATION

Credit Quality Indicators (Unaudited)

(In thousands)

As of September 30, 2012

 

     Loan Grade         
     Pass      Special Mention      Substandard      Doubtful      Total  

Real estate loans

              

Multi-family residential

   $ 41,744       $ —         $ 1,336       $ —         $ 43,080   

Residential 1-4 family

     44,899         —           8,657         —           53,556   

Owner-occupied commercial

     212,243         —           10,131         —           222,374   

Nonowner-occupied commercial

     136,518         —           3,586         —           140,104   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total real estate loans

     435,404         —           23,710         —           459,114   

Construction

              

Multi-family residential

     12,794         —           —           —           12,794   

Residential 1-4 family

     17,916         —           192         —           18,108   

Commercial real estate

     14,219         —           1,598         —           15,817   

Commercial bare land and acquisition & development

     9,887         —           —           —           9,887   

Residential bare land and acquisition & development

     6,096         —           3,012         —           9,108   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total construction loans

     60,912         —           4,802         —           65,714   

Commercial and other

     298,136         —           10,068         —           308,204   

Consumer

     3,874         —           67         —           3,941   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 798,326       $ —         $ 38,647       $ —         $ 836,973