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Exhibit 99.1

NEWS RELEASE

 

FOR MORE INFORMATION CONTACT:   Michael Dunne
  Public Information Officer
  541-338-1428
  www.therightbank.com
  Email: michael.dunne@therightbank.com

FOR IMMEDIATE RELEASE

Pacific Continental Corporation Reports Third Quarter 2014 Results

Deposit growth and improved efficiency drive third quarter results

EUGENE, Ore., October 22, 2014 – Pacific Continental Corporation (Nasdaq: PCBK), the holding company of Pacific Continental Bank, today reported financial results for the third quarter 2014.

Recent highlights:

 

    Net income of $4.4 million for the quarter, up 12.46% over third quarter last year.

 

    Repurchased 132,358 shares during the third quarter 2014.

 

    Average core deposits increased $26.6 million or 2.63% during third quarter.

 

    Efficiency ratio continued to improve and remained below 60.00% during third quarter 2014

 

    Declared fourth quarter 2014 regular quarterly cash dividend of $0.10 per share and a special cash dividend of $0.05 per share.

 

    Received Spotlight on Business Award for large business from the Tacoma-Pierce County Chamber of Commerce for members that have set the standard for exemplary business practices.

Net income

Net income for third quarter 2014 was $4.4 million or $0.25 per diluted share compared to net income of $3.9 million or $0.22 per diluted share in third quarter 2013. Third quarter 2014 financial results included the recovery of $300 thousand of legal fees expensed in prior reporting periods that improved earnings per diluted share by $0.01. Return on average assets, average book equity, and average tangible equity were 1.18%, 9.69%, and 11.13%, respectively, in third quarter 2014, compared to 1.09%, 8.77%, and 10.12% in third quarter 2013. The Company’s efficiency ratio was 57.04% for the third quarter 2014, compared to 62.81% in third quarter 2013.

Our current quarter results reflect the success we have had in executing our business strategies,” said Hal Brown, chief executive officer. “We continue to be pleased with our efforts to improve our processes and efficiency, which we believe will result in long-term shareholder returns.”

Capital levels

The Company’s capital ratios continued to be well above the minimum for the FDIC’s minimum “well-capitalized” designation. At September 30, 2014, the Company’s Tier 1 leverage ratio, Tier 1 risk-based capital ratio, and Total risk-based capital ratios were 11.20%, 14.44% and 15.69%, respectively, as compared to 11.26%, 14.48% and 15.73% at June 30, 2014. The FDIC’s minimum “well-capitalized” designation ratios for these metrics are 5.00%, 6.00% and 10.00%, respectively.

On May 6, 2014, the Company’s board of directors authorized the repurchase of up to five percent or approximately 893,000 of the Company’s shares with purchases to take place over the next 12 months. During the third quarter 2014, the Company repurchased 132,358 shares at a weighted average price of $13.60 per share. Since the inception of the share repurchase plan, the Company has repurchased 267,080 shares at a weighted average price of $13.48 per share. Share repurchases and cash dividend payments to shareholders combined to maintain capital levels for third quarter 2014 relatively unchanged from December 31, 2011 levels.


Core deposits

Period-end Company-defined core deposits at September 30, 2014, were $1.05 billion, up $20.7 million from June 30, 2014, and were consistent with typical third quarter seasonal patterns. Average core deposits, which removes daily volatility in balances, for the third quarter 2014 were $1.04 billion compared to $1.01 billion and $972.4 million for second quarter 2014 and third quarter 2013, respectively. At period-end September 30, 2014, noninterest-bearing demand deposits totaled $390.8 million and represented 37.32% of core deposits.

“The success of our well-established business model in attracting core deposits and our focus on building long-term client relationships resulted in acceleration of our core deposit growth,” said Roger Busse, president and chief operating officer. “We continue to provide high levels of personal and technological service to our clients, which build a strong and stable core deposit base to support our lending activities.”

Loans

Outstanding gross loans at September 30, 2014, were $1.04 billion, up $4.7 million from June 30, 2014 and up $57.2 million over September 30, 2013. Loan growth for the first nine months of 2014 represented an annualized growth rate of 5.52%. This growth rate excludes unfunded construction and related lending commitments made during the last two quarters that total $31.5 million. Overall, loan growth during 2014 was primarily attributable to local real estate lending. Loan growth slowed in the current quarter due to pay offs on completed construction loans, early pay offs, and amortization of the portfolio. Loans to dental professionals expanded during the current quarter. At September 30, 2014, loans to dental practitioners totaled $307.1 million and represented 29.65% of the loan portfolio compared to 29.37% and 31.05% of the loan portfolio at June 30, 2014 and September 30, 2013, respectively. National dental loans at September 30, 2014, were $142.8 million, up $9.1 million over June 30, 2014.

Credit quality and statistics

For the sixth consecutive quarter, the Company made no provision for loan losses, reflecting the credit quality of the loan portfolio. With the growth in the loan portfolio, the allowance for loan losses as a percentage of outstanding loans at September 30, 2014, declined to 1.52% compared to 1.72% at September 30, 2013. The allowance for loan losses as a percentage of nonperforming loans net of guarantees remained very strong at 536.22%. During the third quarter 2014, the Company recorded net loan recoveries totaling $47 thousand. Through September 30, 2014, net loan charge offs were $195 thousand compared to net loan recoveries of $206 thousand for the same period in 2013.

At September 30, 2014, nonperforming assets, net of government guarantees, totaled $16.1 million, or 1.08% of total assets, unchanged from June 30, 2014, but a decrease from the September 30, 2013 ratio of 1.50%. Nonperforming assets at September 30, 2014 were comprised of $2.9 million of nonperforming loans, net of government guarantees, and $13.2 million in other real estate owned. During the third quarter 2014, the Company transferred a $1.2 million nonaccrual commercial real estate loan into other real estate owned that resulted in no additional charge-off. Classified assets at September 30, 2014, totaled $43.5 million, a decrease of $600 thousand from the end of the prior quarter and a decline of $11 million from September 30, 2013. Loans past-due 30-89 days were 0.16% of total loans at September 30, 2014, compared to 0.08% of total loans at June 30, 2014.

“We are pleased with the continued incremental improvement of the overall credit quality of our loan portfolio,” said Casey Hogan, executive vice president and chief credit officer. “We are particularly pleased with the collection efforts of our Special Asset Group that resulted in a large recovery of legal expenses during the quarter.”

Net interest margin

The third quarter 2014 net interest margin averaged 4.28%, a decline of 6 basis points and 29 basis points from second quarter 2014 and third quarter 2013, respectively. The decline in the linked-quarter net interest margin was due to lower earning asset yields as the yield on both the loan and securities portfolio fell slightly. The decline in the current quarter net interest margin from last year of 30 basis points was due to nonrecurring interest income recoveries of $982 thousand recorded in third quarter 2013, which resulted in an increase of 30 basis points in the reported margin in that period. During the third quarter 2014, the accretion of loan fair value marks was $95 thousand and positively impacted the net interest margin by 3 basis points.

Noninterest income and expense

Third quarter 2014 noninterest income was $1.2 million, up $41 thousand from second quarter 2014, and down $250 thousand from third quarter 2013. Third quarter 2014 noninterest income also reflected lower merchant processing revenues resulting from the outsourcing of this activity that occurred during the fourth quarter 2013. The outsourcing of merchant processing also eliminated related processing expense.


Noninterest expense in third quarter 2014 was down $120 thousand and $1.3 million from second quarter 2014 and third quarter 2013, respectively. The decrease in noninterest expense on a linked-quarter basis was primarily due to the recovery of legal fees totaling $300 thousand recorded in prior reporting periods. The decline in year-over-year noninterest expense was also due to lower legal fees and reductions in other real estate expense. Third quarter 2013 results included other real estate valuation write-downs totaling $728 thousand that accounted for most of the decline in this category. Year-to-date September 30, 2014, noninterest expense of $27.9 million was down $1.5 million from 2013, when merger-related expense of $1.2 million was excluded from 2013 results.

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 certain non-GAAP financial measures provide investors with information useful in understanding the Company’s financial performance; however, readers of this report 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 other intangible assets. Additionally, tangible assets are calculated as total assets less goodwill and other intangible assets.

The following table presents a reconciliation of ending shareholders’ equity (GAAP) to ending tangible shareholders’ equity (non-GAAP), and total assets (GAAP) and total assets (non-GAAP)

 

     September 30,
2014
     June 30,
2014
     September 30,
2013
 

Total shareholders’ equity

   $ 182,538       $ 182,137       $ 179,678   

Subtract:

        

Goodwill

     22,881         22,881         22,945   

Core deposit intangible assets

     644         674         765   
  

 

 

    

 

 

    

 

 

 

Tangible shareholders’ equity (non-GAAP)

   $ 159,013       $ 158,582       $ 155,968   
  

 

 

    

 

 

    

 

 

 

Total assets

   $ 1,489,719       $ 1,498,763       $ 1,454,878   

Subtract:

        

Goodwill

     22,881         22,881         22,945   

Core deposit intangible assets

     644         674         765   
  

 

 

    

 

 

    

 

 

 

Tangible assets (non-GAAP)

   $ 1,466,194       $ 1,475,208       $ 1,431,168   
  

 

 

    

 

 

    

 

 

 

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 2014 on Thursday, October 23, 2014, 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 $1.5 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 position, liquidity, credit quality, credit quality trends, competition 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    

Linked

Quarter
% Change

   

Year over

Year
% Change

 
     September 30,
2014
    June 30,
2014
    September 30,
2013
     

Interest and dividend income

          

Loans

   $ 13,703      $ 13,514      $ 14,028        1.40 %     -2.32

Taxable securities

     1,547        1,614        1,489        -4.15     3.90

Tax-exempt securities

     500        488        488        2.46 %     2.46

Federal funds sold & interest-bearing deposits with banks

     3        2        2        50.00 %     50.00
  

 

 

   

 

 

   

 

 

     
     15,753        15,618        16,007        0.86 %     -1.59
  

 

 

   

 

 

   

 

 

     

Interest expense

          

Deposits

     843        821        801        2.68 %     5.24

Federal Home Loan Bank & Federal Reserve borrowings

     278        280        292        -0.71     -4.79

Junior subordinated debentures

     57        56        51        1.79 %     11.76

Federal funds purchased

     3        4        5        -25.00     -40.00
  

 

 

   

 

 

   

 

 

     
     1,181        1,161        1,149        1.72 %     2.79
  

 

 

   

 

 

   

 

 

     

Net interest income

     14,572        14,457        14,858        0.80 %     -1.92

Provision for loan losses

     —          —          —         
  

 

 

   

 

 

   

 

 

     

Net interest income after provision for loan losses

     14,572        14,457        14,858        0.80 %     -1.92
  

 

 

   

 

 

   

 

 

     

Noninterest income

          

Service charges on deposit accounts

     524        540        487        -2.96     7.60

Other fee income, principally bankcard

     211        229        432        -7.86     -51.16

Bank-owned life insurance income

     118        117        131        0.85 %     -9.92

Gain (loss) on sale of investment securities

     3        (100     —          -103.00     NA   

Other noninterest income

     341        370        397        -7.84     -14.11
  

 

 

   

 

 

   

 

 

     
     1,197        1,156        1,447        3.55 %     -17.28
  

 

 

   

 

 

   

 

 

     

Noninterest expense

          

Salaries and employee benefits

     5,939        6,093        5,541        -2.53     7.18

Premises and equipment

     958        924        919        3.68 %     4.24

Data processing

     657        693        659        -5.19     -0.30

Legal and professional fees

     148        251        421        -41.04     -64.85

Business development

     344        340        421        1.18 %     -18.29

FDIC insurance assessment

     209        217        231        -3.69     -9.52

Bankcard processing

     1        2        150        -50.00     -99.33

Other real estate expense

     100        16        1,185        525.00 %     -91.56

Other noninterest expense

     793        733        879        8.19 %     -9.78
  

 

 

   

 

 

   

 

 

     
     9,149        9,269        10,406        -1.29     -12.08
  

 

 

   

 

 

   

 

 

     

Income before provision for income taxes

     6,620        6,344        5,899        4.35 %     12.22

Provision for income taxes

     2,189        2,196        1,959        -0.32     11.74
  

 

 

   

 

 

   

 

 

     

Net income

   $ 4,431      $ 4,148      $ 3,940        6.82 %     12.46
  

 

 

   

 

 

   

 

 

     

Earnings per share:

          

Basic

   $ 0.25      $ 0.23      $ 0.22        7.67 %     13.34
  

 

 

   

 

 

   

 

 

     

Diluted

   $ 0.25      $ 0.23      $ 0.22        7.71 %     13.33
  

 

 

   

 

 

   

 

 

     

Weighted average shares outstanding:

          

Basic

     17,749,217        17,889,562        17,888,182       

Common stock equivalents attributable to stock-based awards

     221,241        229,850        221,100       
  

 

 

   

 

 

   

 

 

     

Diluted

     17,970,458        18,119,412        18,109,282       
  

 

 

   

 

 

   

 

 

     

PERFORMANCE RATIOS

          

Return on average assets

     1.18     1.13     1.09    

Return on average equity (book)

     9.69     9.16     8.77    

Return on average equity (tangible)(1)

     11.13     10.53     10.12    

Net interest margin-fully tax-equivalent yield(2)

     4.28     4.34     4.57    

Efficiency ratio(3)

     57.04     58.38     62.81    

 

(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.


PACIFIC CONTINENTAL CORPORATION

Year-to-Date Consolidated Income Statements

(In thousands, except share and per share amounts)

(Unaudited)

 

     Nine months ended    

Year over

Year

% Change

 
     September 30,
2014
    September 30,
2013
   

Interest and dividend income

      

Loans

   $ 40,391      $ 39,793        1.50

Taxable securities

     4,693        4,164        12.70

Tax-exempt securities

     1,471        1,430        2.87

Federal funds sold & interest-bearing deposits with banks

     7        7        0.00
  

 

 

   

 

 

   
     46,562        45,394        2.57
  

 

 

   

 

 

   

Interest expense

      

Deposits

     2,469        2,586        -4.52

Federal Home Loan Bank & Federal Reserve borrowings

     838        905        -7.40

Junior subordinated debentures

     169        140        20.71

Federal funds purchased

     12        12        0.00
  

 

 

   

 

 

   
     3,488        3,643        -4.25
  

 

 

   

 

 

   

Net interest income

     43,074        41,751        3.17

Provision for loan losses

     —          250        -100.00
  

 

 

   

 

 

   

Net interest income after provision for loan losses

     43,074        41,501        3.79
  

 

 

   

 

 

   

Noninterest income

      

Service charges on deposit accounts

     1,582        1,436        10.17

Other fee income, principally bankcard

     657        1,217        -46.01

Bank-owned life insurance income

     352        387        -9.04

Loss on sale of investment securities

     (34     (8     325.00

Impairment losses on investment securities (OTTI)

     —          (16     -100.00

Other noninterest income

     1,119        1,248        -10.34
  

 

 

   

 

 

   
     3,676        4,264        -13.79
  

 

 

   

 

 

   

Noninterest expense

      

Salaries and employee benefits

     17,851        16,344        9.22

Premises and equipment

     2,825        2,746        2.88

Data processing

     2,019        1,954        3.33

Legal and professional fees

     889        1,460        -39.11

Business development

     1,059        1,375        -22.98

FDIC insurance assessment

     647        674        -4.01

Other real estate expense

     338        1,762        -80.82

Bankcard processing

     6        418        -98.56

Merger related expenses(1)

     —          1,246        -100.00

Other noninterest expense

     2,296        2,708        -15.21
  

 

 

   

 

 

   
     27,930        30,687        -8.98
  

 

 

   

 

 

   

Income before provision for income taxes

     18,820        15,078        24.82

Provision for income taxes

     6,409        4,963        29.14
  

 

 

   

 

 

   

Net income

   $ 12,411      $ 10,115        22.70
  

 

 

   

 

 

   

Earnings per share:

      

Basic

   $ 0.70      $ 0.57        22.84
  

 

 

   

 

 

   

Diluted

   $ 0.69      $ 0.56        22.58
  

 

 

   

 

 

   

Weighted average shares outstanding:

      

Basic

     17,844,914        17,865,582     

Common stock equivalents attributable to stock-based awards

     229,687        191,046     
  

 

 

   

 

 

   

Diluted

     18,074,601        18,056,628     
  

 

 

   

 

 

   

PERFORMANCE RATIOS

      

Return on average assets

     1.13     0.95  

Return on average equity (book)

     9.16     7.46  

Return on average equity (tangible)(2)

     10.53     8.58  

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

     4.31     4.35  

Efficiency ratio(4)

     58.75     65.59  

 

(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 as a percent of net interest income (on a tax-equivalent basis) plus noninterest income.


PACIFIC CONTINENTAL CORPORATION

Consolidated Balance Sheets

(In thousands, except share amounts)

(Unaudited)

 

     September 30,
2014
    June 30,
2014
    September 30,
2013
   

Linked

Quarter
% Change

   

Year over

Year
% Change

 
          

ASSETS

          

Cash and due from banks

   $ 18,671      $ 28,219      $ 26,568        -33.84     -29.72

Interest-bearing deposits with banks

     5,841        15,224        16,041        -61.63     -63.59
  

 

 

   

 

 

   

 

 

     

Total cash and cash equivalents

     24,512        43,443        42,609        -43.58     -42.47

Securities available-for-sale

     348,052        344,645        347,506        0.99     0.16

Loans, less allowance for loan losses and net deferred fees

     1,019,127        1,014,346        960,916        0.47     6.06

Interest receivable

     4,759        5,101        4,608        -6.70     3.28

Federal Home Loan Bank stock

     10,125        10,227        10,523        -1.00     -3.78

Property and equipment, net of accumulated depreciation

     18,040        18,366        19,116        -1.78     -5.63

Goodwill and intangible assets

     23,525        23,555        23,710        -0.13     -0.78

Deferred tax asset

     7,247        7,154        9,438        1.30     -23.21

Other real estate owned

     13,177        11,531        16,602        14.27     -20.63

Bank-owned life insurance

     16,488        16,370        16,008        0.72     3.00

Other assets

     4,667        4,025        3,842        15.95     21.47
  

 

 

   

 

 

   

 

 

     

Total assets

   $ 1,489,719      $ 1,498,763      $ 1,454,878        -0.60     2.39
  

 

 

   

 

 

   

 

 

     

LIABILITIES AND SHAREHOLDERS’ EQUITY

          

Deposits

          

Noninterest-bearing demand

   $ 390,790      $ 397,942      $ 379,598        -1.80     2.95

Savings and interest-bearing checking

     598,776        565,265        565,204        5.93     5.94

Core time deposits

     57,645        63,335        70,850        -8.98     -18.64
  

 

 

   

 

 

   

 

 

     

Total core deposits(2)

     1,047,211        1,026,542        1,015,652        2.01     3.11

Other deposits

     98,024        106,112        101,877        -7.62     -3.78
  

 

 

   

 

 

   

 

 

     

Total deposits

     1,145,235        1,132,654        1,117,529        1.11     2.48

Federal funds and overnight funds purchased

     670        6,410        —          -89.55     0.00

Federal Home Loan Bank borrowings

     145,000        164,500        145,000        -11.85     0.00

Junior subordinated debentures

     8,248        8,248        8,248        0.00     0.00

Accrued interest and other payables

     8,028        4,814        4,423        66.76     81.51
  

 

 

   

 

 

   

 

 

     

Total liabilities

     1,307,181        1,316,626        1,275,200        -0.72     2.51
  

 

 

   

 

 

   

 

 

     

Shareholders’ equity

          

Common stock: 50,000,000 shares authorized. Shares issued and outstanding: 17,716,776 at September 30, 2014, 17,848,900 at June 30, 2014 and 17,888,251 at September 30, 2013

     131,057        132,532        133,597        -1.11     -1.90

Retained earnings

     48,011        45,887        45,533        4.63     5.44

Accumulated other comprehensive income

     3,470        3,718        548        -6.67     533.21
  

 

 

   

 

 

   

 

 

     
     182,538        182,137        179,678        0.22     1.59
  

 

 

   

 

 

   

 

 

     

Total liabilities and shareholders’ equity

   $ 1,489,719      $ 1,498,763      $ 1,454,878        -0.60     2.39
  

 

 

   

 

 

   

 

 

     

CAPITAL RATIOS

          

Total capital (to risk weighted assets)

     15.69     15.73     16.42    

Tier I capital (to risk weighted assets)

     14.44     14.48     15.16    

Tier I capital (to leverage assets)

     11.20     11.26     11.56    

Tangible common equity (to tangible assets)(1)

     10.85     10.75     10.90    

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

     14.04     14.44     14.47    

OTHER FINANCIAL DATA

          

Shares outstanding at end of period

     17,716,776        17,848,900        17,888,251       

Tangible shareholders’ equity(1)

   $ 159,013      $ 158,582      $ 155,968       

Book value per share

   $ 10.30      $ 10.20      $ 10.04       

Tangible book value per share

   $ 8.98      $ 8.88      $ 8.72       

 

(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.


PACIFIC CONTINENTAL CORPORATION

Loans by Type

(In thousands)

(Unaudited)

 

     September 30,
2014
    June 30,
2014
    September 30,
2013
    Linked
Quarter
% Change
    Year over
Year
% Change
 

LOANS BY TYPE

          

Real estate secured loans:

          

Permanent loans:

          

Multi-family residential

   $ 50,563      $ 50,867      $ 47,795        -0.60     5.79

Residential 1-4 family

     44,610        46,287        49,206        -3.62     -9.34

Owner-occupied commercial

     249,657        255,562        244,828        -2.31     1.97

Nonowner-occupied commercial

     180,648        182,141        164,708        -0.82     9.68
  

 

 

   

 

 

   

 

 

     

Total permanent real estate loans

     525,478        534,857       506,537        -1.75     3.74

Construction loans:

          

Multi-family residential

     19,178        19,539        22,929        -1.85     -16.36

Residential 1-4 family

     35,421        33,951        29,880        4.33 %     18.54

Commercial real estate

     32,946        28,019        24,106        17.58 %     36.67

Commercial bare land and acquisition & development

     12,264        11,096        11,191        10.53 %     9.59

Residential bare land and acquisition & development

     6,736        6,240        7,053        7.95 %     -4.49
  

 

 

   

 

 

   

 

 

     

Total construction real estate loans

     106,545        98,845        95,159        7.79 %     11.97

Total real estate loans

     632,023        633,702        601,696        -0.26     5.04

Commercial loans

     398,702        392,810        372,129        1.50 %     7.14

Consumer loans

     3,348        3,410        3,660        -1.82     -8.52

Other loans

     1,802        1,207        1,188        49.30 %     51.68
  

 

 

   

 

 

   

 

 

     

Gross loans

     1,035,875        1,031,129       978,673        0.46 %     5.84

Deferred loan origination fees

     (1,026     (1,108     (955     -7.40     7.43
  

 

 

   

 

 

   

 

 

     
     1,034,849        1,030,021       977,718        0.47 %     5.84

Allowance for loan losses

     (15,722     (15,675     (16,802     0.30 %     -6.43
  

 

 

   

 

 

   

 

 

     
   $ 1,019,127      $ 1,014,346     $ 960,916        0.47 %     6.06
  

 

 

   

 

 

   

 

 

     

SELECTED MARKET LOAN DATA

          

Eugene market gross loans, period-end

   $ 361,599      $ 354,430      $ 324,320        2.02 %     11.49

Portland market gross loans, period-end

     389,977        399,764        390,014        -2.45     -0.01

Seattle market gross loans, period-end

     132,827        134,969        136,178        -1.59     -2.46

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

     151,472        141,966        128,161        6.70 %     18.19
  

 

 

   

 

 

   

 

 

     

Total gross loans, period-end

   $ 1,035,875      $ 1,031,129     $ 978,673        0.46 %     5.84
  

 

 

   

 

 

   

 

 

     

DENTAL LOAN DATA(2) 

          

Local Dental gross loans, period-end

   $ 164,271      $ 169,102      $ 181,397        -2.86     -9.44

National Dental gross loans, period-end

     142,817        133,720        122,514        6.80 %     16.57
  

 

 

   

 

 

   

 

 

     

Total gross dental loans, period-end

   $ 307,088      $ 302,822     $ 303,911        1.41 %     1.05
  

 

 

   

 

 

   

 

 

     

 

(1) 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.
(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     Nine months ended  
     September 30,
2014
    June 30,
2014
    September 30,
2013
    September 30,
2014
    September 30,
2013
 

BALANCE SHEET AVERAGES

          

Loans, net of deferred fees

   $ 1,038,970      $ 1,026,937      $ 974,775      $ 1,024,935      $ 949,531   

Allowance for loan losses

     (15,704     (15,546     (16,403     (15,718     (16,419
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans, net of allowance

     1,023,266        1,011,391        958,372        1,009,217        933,112   

Securities and short-term deposits

     351,695        348,985        351,536        350,487        371,495   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earning assets

     1,374,961        1,360,376        1,309,908        1,359,704        1,304,607   

Noninterest-earning assets

     113,786        113,094        125,349        114,835        124,062   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Assets

   $ 1,488,747      $ 1,473,470     $ 1,435,257      $ 1,474,539      $ 1,428,669   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest-bearing core deposits(1)

   $ 645,598      $ 648,530      $ 625,795      $ 647,075      $ 633,338   

Noninterest-bearing core deposits(1)

     391,738        362,204        346,692        366,607        327,643   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Core deposits(1)

     1,037,336        1,010,734        972,487        1,013,682        960,981   

Noncore interest-bearing deposits

     104,561        105,229        105,408        103,749        108,363   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Deposits

     1,141,897        1,115,963        1,077,895        1,117,431        1,069,344   

Borrowings

     158,418        171,385        174,973        170,311        174,217   

Other noninterest-bearing liabilities

     6,975        4,545        4,144        5,605        3,911   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities

     1,307,290        1,291,893        1,257,012        1,293,347        1,247,472   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shareholders’ equity (book)

     181,457        181,577        178,245        181,192        181,197   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and equity

   $ 1,488,747      $ 1,473,470      $ 1,435,257      $ 1,474,539      $ 1,428,669   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shareholders’ equity (tangible)(2)

   $ 157,916      $ 158,006      $ 154,519      $ 157,621      $ 157,657   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Period-end earning assets

   $ 1,373,020      $ 1,374,215      $ 1,324,463       
  

 

 

   

 

 

   

 

 

     

SELECTED MARKET DEPOSIT DATA

          

Eugene market core deposits, period-end(1)

   $ 642,220      $ 616,294      $ 596,404       

Portland market core deposits, period-end(1)

     256,732        250,288        256,710       

Seattle market core deposits, period-end(1)

     148,259        159,960        162,538       
  

 

 

   

 

 

   

 

 

     

Total core deposits, period-end(1)

     1,047,211        1,026,542        1,015,652       

Other deposits, period-end

     98,024        106,112        101,877       
  

 

 

   

 

 

   

 

 

     

Total

   $ 1,145,235      $ 1,132,654      $ 1,117,529       
  

 

 

   

 

 

   

 

 

     

Eugene market core deposits, average(1)

   $ 634,412      $ 624,721      $ 589,123       

Portland market core deposits, average(1)

     250,029        234,567        240,612       

Seattle market core deposits, average(1)

     152,895        151,446        142,752       
  

 

 

   

 

 

   

 

 

     

Total core deposits, average(1)

     1,037,336        1,010,734        972,487       

Other deposits, average

     104,561        105,229        105,408       
  

 

 

   

 

 

   

 

 

     

Total

   $ 1,141,897      $ 1,115,963      $ 1,077,895       
  

 

 

   

 

 

   

 

 

     

NET INTEREST MARGIN RECONCILIATION

          

Yield on average loans

     5.31     5.36     5.81     5.35     5.70

Yield on average securities(3)

     2.61     2.72     2.53     2.65     2.29
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Yield on average earning assets(3)

     4.62     4.68     4.93     4.66     4.73

Rate on average interest-bearing core deposits

     0.28     0.29     0.33     0.29     0.35

Rate on average interest-bearing non-core deposits

     1.48     1.36     1.08     1.37     1.16
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Rate on average interest-bearing deposits

     0.45     0.44     0.43     0.44     0.47

Rate on average borrowings

     0.85     0.80     0.79     0.80     0.81
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of interest-bearing funds

     0.52     0.50     0.50     0.51     0.53
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest rate spread(3)

     4.11     4.18     4.42     4.15     4.20
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin-fully tax equivalent yield(3)

     4.28     4.34     4.58     4.31     4.36
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Acquired loan fair value accretion impact to net interest margin(4)

     0.03     0.03     0.05     0.05     0.08
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(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)  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 $269, $263 and $263 for the three months ended September 30, 2014, June 30, 2014, and September 30, 2013, respectively, and $792 and $770 for the nine months ended September 30, 2014 and 2013, respectively.
(4)  During the three months ended September 30, 2014, June 30, 2014 and September 30, 2013 accretion of the fair value adjustment on the Century Bank acquired loans contributed to interest income $95, $116, and $168, respectively, and $436 and $777 for the nine months ended September 30, 2014 and 2013, respectively.


PACIFIC CONTINENTAL CORPORATION

Nonperforming Assets, Asset Quality Ratios and Allowance for Loan Losses

(In thousands)

(Unaudited)

 

     September 30,
2014
    June 30,
2014
    September 30,
2013
 

NONPERFORMING ASSETS

      

Non-accrual loans

      

Real estate secured loans:

      

Permanent loans:

      

Multi-family residential

   $ —        $ —        $ —     

Residential 1-4 family

     459        473        1,206  

Owner-occupied commercial

     787        1,703        2,235  

Nonowner-occupied commercial

     1,245        708        139  
  

 

 

   

 

 

   

 

 

 

Total permanent real estate loans

     2,491        2,884        3,580  

Construction loans:

      

Multi-family residential

     —          —          —     

Residential 1-4 family

     —          —          —     

Commercial real estate

     —          —          —     

Commercial bare land and acquisition & development

     —          —          —     

Residential bare land and acquisition & development

     —          —          —     
  

 

 

   

 

 

   

 

 

 

Total construction real estate loans

     —          —          —     
  

 

 

   

 

 

   

 

 

 

Total real estate loans

     2,491        2,884        3,580  

Commercial loans

     762        2,047        2,361  
  

 

 

   

 

 

   

 

 

 

Total nonaccrual loans

     3,253        4,931        5,941  

90-days past due and accruing interest

     —          —          —     

Total nonperforming loans

     3,253        4,931        5,941  
  

 

 

   

 

 

   

 

 

 

Nonperforming loans guaranteed by government

     (321     (325     (786 )

Net nonperforming loans

     2,932        4,606        5,155  
  

 

 

   

 

 

   

 

 

 

Other real estate owned

     13,177        11,531        16,602  
  

 

 

   

 

 

   

 

 

 

Total nonperforming assets, net of guaranteed loans

   $ 16,109      $ 16,137      $ 21,757  
  

 

 

   

 

 

   

 

 

 

ASSET QUALITY RATIOS

      

Allowance for loan losses as a percentage of total loans outstanding

     1.52     1.52 %     1.72 %

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

     536.22     340.32 %     325.94 %

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

     0.03     0.05 %     -0.03

Net nonperforming loans as a percentage of total loans

     0.28     0.45 %     0.53 %

Nonperforming assets as a percentage of total assets

     1.08     1.08 %     1.50 %

Consolidated classified asset ratio(1)

     24.27     24.72 %     30.25 %

Past due as a percentage of total loans(2)

     0.16     0.08 %     0.37 %

 

     Three months ended     Nine months ended  
     September 30,
2014
    June 30,
2014
    September 30,
2013
    September 30,
2014
    September 30,
2013
 

ALLOWANCE FOR LOAN LOSSES

          

Balance at beginning of period

   $ 15,675      $ 15,394      $ 16,303      $ 15,917      $ 16,346   

Provision for loan losses

     —          —          —          —          250   

Loan charge offs

     (23     (30     (221     (654     (1,049

Loan recoveries

     70        311        720        459        1,255   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net recoveries (charge offs)

     47        281        499        (195     206   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 15,722      $ 15,675      $ 16,802      $ 15,722      $ 16,802   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(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

Consolidated Financial Highlights

(In thousands)

(Unaudited)

 

     3rd Quarter     2nd Quarter     1st Quarter     4th Quarter     3rd Quarter  
     2014     2014     2014     2013     2013  

EARNINGS

          

Net interest income

   $ 14,572      $ 14,457      $ 14,044      $ 14,388      $ 14,858   

Provision for loan loss

   $ —        $ —        $ —        $ —        $ —     

Noninterest income

   $ 1,197      $ 1,156      $ 1,323      $ 1,563      $ 1,447   

Noninterest expense

   $ 9,149      $ 9,269      $ 9,511      $ 10,045      $ 10,406   

Net income

   $ 4,431      $ 4,148      $ 3,832      $ 3,652      $ 3,940   

Basic earnings per share

   $ 0.25      $ 0.23      $ 0.21      $ 0.20      $ 0.22   

Diluted earnings per share

   $ 0.25      $ 0.23      $ 0.21      $ 0.20      $ 0.22   

Average shares outstanding

     17,749,217        17,889,562        17,897,593        17,888,818        17,888,182   

Average diluted shares outstanding

     17,970,458        18,119,412        18,126,188        18,126,273        18,109,282   

PERFORMANCE RATIOS

          

Return on average assets

     1.18     1.13     1.06     1.00     1.09

Return on average equity (book)

     9.69     9.16     8.61     8.06     8.77

Return on average equity (tangible)(1)

     11.13     10.53     9.90     9.28     10.12

Net interest margin - fully tax equivalent yield(2)

     4.28     4.34     4.32     4.38     4.57

Efficiency ratio (tax equivalent)(3)

     57.04     58.38     60.86     61.95     62.81

Full-time equivalent employees

     289        283        285        290        285   

CAPITAL

          

Tier 1 leverage ratio

     11.20     11.26     11.44     11.49     11.56

Tier 1 risk based ratio

     14.44     14.48     14.95     14.90     15.16

Total risk based ratio

     15.69     15.73     16.21     16.15     16.42

Book value per share

   $ 10.30      $ 10.20      $ 10.13      $ 10.01      $ 10.04   

Regular cash dividend per share

   $ 0.10      $ 0.10      $ 0.10      $ 0.10      $ 0.09   

Special cash dividend per share

   $ 0.03      $ 0.11      $ 0.10      $ 0.12      $ 0.12   

ASSET QUALITY

          

Allowance for loan losses (ALL)

   $ 15,722      $ 15,675      $ 15,394      $ 15,917      $ 16,802   

Non performing loans (NPLs) net of government guarantees

   $ 2,932      $ 4,606      $ 4,539      $ 4,608      $ 5,155   

Non performing assets (NPAs) net of government guarantees

   $ 16,109      $ 16,137      $ 16,070      $ 20,963      $ 21,757   

Net loan (recoveries) charge offs

   $ (47   $ (281   $ 523      $ 885      $ (499

ALL as a percentage of gross loans

     1.52     1.52     1.51     1.60     1.72

ALL as a % NPLs, net of government guarantees

     536.22     340.32     339.15     345.42     325.94

Net loan charge offs (recoveries) to average loans

     -0.02     -0.11     0.21     0.35     -0.21

Net NPLs as a percentage of total loans

     0.28     0.45     0.44     0.46     0.53

Nonperforming assets as a percentage of total assets

     1.08     1.08     1.09     1.45     1.50

Consolidated classified asset ratio(4)

     24.27     24.72     26.82     29.02     30.25

Past due as a percentage of total loans(5)

     0.16     0.08     0.20     0.23     0.37

END OF PERIOD BALANCES

          

Total securities and short term deposits

   $ 353,893      $ 359,869      $ 345,121      $ 349,084      $ 363,547   

Total loans net of allowance

   $ 1,019,127      $ 1,014,346      $ 1,004,751      $ 977,928      $ 960,916   

Total earning assets

   $ 1,373,020      $ 1,374,215      $ 1,349,872      $ 1,327,012      $ 1,324,463   

Total assets

   $ 1,489,719      $ 1,498,763      $ 1,471,591      $ 1,449,726      $ 1,454,878   

Total non-interest bearing deposits

   $ 390,790      $ 397,942      $ 340,464      $ 366,890      $ 379,598   

Core deposits(6)

   $ 1,047,211      $ 1,026,542      $ 990,933      $ 990,315      $ 1,015,651   

Total deposits

   $ 1,145,235      $ 1,132,654      $ 1,097,355      $ 1,090,981      $ 1,117,529   

AVERAGE BALANCES

          

Total securities and short term deposits

   $ 351,695      $ 348,985      $ 350,774      $ 353,061      $ 355,059   

Total loans net of allowance

   $ 1,023,266      $ 1,011,391      $ 992,655      $ 973,857      $ 958,372   

Total earning assets

   $ 1,374,961      $ 1,360,376      $ 1,343,429      $ 1,326,918      $ 1,313,431   

Total assets

   $ 1,488,747      $ 1,473,470      $ 1,461,095      $ 1,446,697      $ 1,435,257   

Total non-interest bearing deposits

   $ 391,738      $ 362,204      $ 345,369      $ 361,046      $ 346,692   

Core deposits(6)

   $ 1,037,336      $ 1,010,734      $ 992,482      $ 987,207      $ 972,487   

Total deposits

   $ 1,141,897      $ 1,115,963      $ 1,093,904      $ 1,088,470      $ 1,077,895   

 

(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)  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.