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8-K - FORM 8-K - PACIFIC CONTINENTAL CORPd855147d8k.htm

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 Fourth Quarter and Full Year 2014 Results

Loan growth, deposit growth and efficiency drive record 2014 earnings

EUGENE, Ore., January 21, 2015 — Pacific Continental Corporation (Nasdaq: PCBK), the holding company of Pacific Continental Bank, today reported financial results for the fourth quarter and full year 2014.

Recent highlights:

 

    Announced acquisition of Capital Pacific Bank expected to close during first quarter 2015.

 

    Record net income of $16.0 million in 2014, up 16.53% over prior year.

 

    Period-end outstanding loans increased $51.2 million or 5.15% over 2013.

 

    Average core deposits increased $45.6 million or 4.40% during fourth quarter and increased $95.7 million or 9.70% over fourth quarter 2013.

 

    Annual efficiency ratio improved to 59.41%.

 

    Declared first quarter 2015 regular quarterly cash dividend of $0.10 per share.

 

    Announced plans to open new office in downtown Vancouver, Washington.

 

    Nationally recognized by the American Bankers Association as the National Community Commitment Award winner for its commitment in employee volunteerism.

 

    Recognized by the Portland Business Journal for the sixth time as one of Oregon’s most admired companies.

Net income

Net income for fourth quarter 2014 was $3.6 million or $0.20 per diluted share compared to net income of $3.7 million or $0.20 per diluted share in fourth quarter 2013. Fourth quarter 2014 results included $470 thousand of merger expense related to the pending acquisition of Capital Pacific Bank that reduced net income in the current quarter by approximately $0.02 per share.

Net income for the full year 2014 was a record $16.0 million or $0.89 per diluted share, compared to net income of $13.8 million or $0.76 per diluted share for 2013. Excluding the $470 thousand of merger expense, net income for the year was $16.3 million or $0.91 per share. Return on average assets, average book equity, and average tangible equity were 1.09%, 8.83%, and 10.14%, respectively. The efficiency ratio for the full year 2014 improved to 59.41%.

Our record earnings for 2014 reflect the efforts of every Pacific Continental employee and the successful execution of our business strategies,” said Roger Busse, chief executive officer. “We are optimistic our results will continue to improve during 2015 on an organic basis, and anticipate our pending acquisition of Capital Pacific Bank in Portland, Oregon will add to our financial performance during the year.”

Core deposits

Period-end Company-defined core deposits at December 31, 2014, were $1.11 billion, up $63.7 million from September 30, 2014, and were consistent with typical fourth quarter seasonal patterns. Outstanding core deposits at December 31, 2014 were up $120.5 million or 12.17% over December 31, 2013. Average core deposits, which removes daily volatility in balances, for the fourth quarter 2014 were $1.08 billion compared to $1.04 billion and $987.2 million for third quarter 2014 and fourth quarter 2013, respectively. At period-end December 31, 2014, noninterest-bearing demand deposits totaled $407.3 million and represented 36.67% of core deposits.


“We strongly believe that a stable and growing core deposit base provides long-term franchise and shareholder value,” said Casey Hogan, chief operating officer. “We continue to provide high levels of personal and technological service to our clients developing long-term deposit relationships to support our lending activities.”

Loans

Outstanding gross loans at December 31, 2014, were $1.05 billion, up $10.1 million from September 30, 2014 and up $51.2 million over December 31, 2013. Overall, loan growth during 2014 was primarily attributable to increased commercial and industrial lending and local real estate lending. Loans to dental professionals were relatively unchanged in fourth quarter 2014 from the previous quarter. During 2014, the Company continued to see expansion of its national dental lending, but experienced a decline in the more seasoned local dental portfolio due to normal principal payments. At December 31, 2014, loans to dental practitioners totaled $306.4 million and represented 29.29% of the loan portfolio compared to 29.65% and 30.89% of the loan portfolio at September 30, 2014 and December 31, 2013, respectively.

Credit quality and statistics

For the seventh 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 December 31, 2014, declined to 1.50% compared to 1.60% at December 31, 2013. The allowance for loan losses as a percentage of nonperforming loans net of guarantees remained very strong at 786.17%. During the fourth quarter 2014, the Company recorded net loan charge offs totaling $85 thousand. For the full year 2014, net loan charge offs were $280 thousand, compared to net loan charge offs of $678 thousand in 2013.

At December 31, 2014, nonperforming assets, net of government guarantees, totaled $15.4 million, or 1.02% of total assets, compared to $21.0 million or 1.45% of total assets at December 31, 2013. Nonperforming assets at December 31, 2014 were comprised of $2.0 million of nonperforming loans, net of government guarantees, and $13.4 million in other real estate owned. Loans past-due 30-89 days were 0.15% of total loans at December 31, 2014, compared to 0.16% of total loans at September 30, 2014.

Net interest margin

The fourth quarter 2014 net interest margin averaged 4.24%, a decline of 4 basis points and 14 basis points from third quarter 2014 and fourth 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 14 basis points was due to nonrecurring interest income recoveries recorded in fourth quarter 2013. During the fourth quarter 2014, the net accretion of loan fair value marks was $90 thousand and positively impacted the net interest margin by 3 basis points.

Noninterest income and expense

Fourth quarter 2014 noninterest income was $1.3 million, up $121 thousand from third quarter 2014, and down $245 thousand from fourth quarter 2013. Fourth quarter 2014 noninterest income reflected increased merchant processing revenues resulting in the linked-quarter improvement. The decline in year-over-year noninterest income resulted from the outsourcing of merchant processing in the fourth quarter 2013. The outsourcing of merchant processing also eliminated related processing expense.

Noninterest expense in fourth quarter 2014 was up $649 thousand over third quarter 2014, primarily due to the $470 thousand of merger expense recorded during the current quarter. For the full year 2014, noninterest expense was down $3.0 million or 7.37%. When the merger related expenses are removed from noninterest expense, $470 thousand related to the Capital Pacific pending acquisition and $1.2 million related to the Century Bank acquisition, noninterest expense declined $2.2 million or 5.64% in 2014 compared to 2013. The decline in year-over-year noninterest expense was primarily due to lower legal fees, business development costs, and reductions in other real estate expense.

Capital levels

The Company’s capital ratios continued to be well above the minimum for the FDIC’s minimum “well-capitalized” designation. At December 31, 2014, the Company’s Tier 1 leverage ratio, Tier 1 risk-based capital ratio, and Total risk-based capital ratios were 11.33%, 14.48% and 15.73%, respectively, as compared to 11.49%, 14.90% and 16.15% at December 31, 2013. 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 outstanding shares with purchases to take place over the following 12 months. During the fourth quarter 2014, the Company did not repurchase any shares. During 2014, the Company repurchased 267,080 shares at a weighted average price of $13.48 per share.

Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principles (GAAP), this press release contains certain non-GAAP financial measures. The Company believes that such non-GAAP financial measures provide investors with information useful in understanding the Company’s financial performance; however, readers of this release are urged to review these non-GAAP financial measures in conjunction with the GAAP results as reported.

Financial measures such as tangible shareholders’ equity are considered non-GAAP measures. Management believes including non-GAAP measures along with GAAP measures provides investors with a broader understanding of capital adequacy. Tangible shareholders’ equity is calculated as total shareholders’ equity less goodwill and 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)

 

     December 31,      September 30,      December 31,  
     2014      2014      2013  
     (In thousands)  

Total shareholders’ equity

   $ 184,161       $ 182,538       $ 179,184   

Subtract:

        

Goodwill

     22,881         22,881         22,881   

Core deposit intangible assets

     614         644         735   
  

 

 

    

 

 

    

 

 

 

Tangible shareholders’ equity (non-GAAP)

   $ 160,666       $ 159,013       $ 155,568   
  

 

 

    

 

 

    

 

 

 

Total assets

   $ 1,504,325       $ 1,489,719       $ 1,449,726   

Subtract:

        

Goodwill

     22,881         22,881         22,881   

Core deposit intangible assets

     614         644         735   
  

 

 

    

 

 

    

 

 

 

Tangible assets (non-GAAP)

   $ 1,480,830       $ 1,466,194       $ 1,426,110   
  

 

 

    

 

 

    

 

 

 

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 fourth quarter and full year 2014 on Thursday, January 22, 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” 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 and expectations regarding the timing and financial impact of Pacific Continental’s announced acquisition of Capital Pacific and plans to open a new office in Vancouver, Washington 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 concentration in loans to dental professionals; adverse economic trends in the United States and the markets we serve affecting the Bank’s borrower base; continued erosion or sustained low levels of consumer confidence; changes in the Federal Reserve’s monetary policies and the regulatory environment and increases in associated costs, particularly ongoing compliance expenses and resource allocation needs; vendor quality and efficiency; the Company’s ability to control risks associated with rapidly changing technology both from an internal perspective as well as for external providers; operational systems or infrastructure failures; increased competition; fluctuating interest rates; a tightening of available credit; the potential adverse impact of legal or regulatory proceedings; and risks related to acquisitions, including integration, retention of key personnel and business, anticipated cost savings and results and performance of the acquired company or the combined entity. Pacific Continental Corporation undertakes no obligation to publicly revise or update any forward-looking statement to reflect the impact of events or circumstances that arise after the date of this release. This statement is included for the express purpose of invoking PSLRA’s safe harbor provisions.


PACIFIC CONTINENTAL CORPORATION

Consolidated Income Statements

(In thousands, except share and per share amounts)

(Unaudited)

 

     December 31,    

Three months ended

September 30,

    December 31,    

Linked

Quarter

   

Year over

Year

 
     2014     2014     2013     % Change     % Change  

Interest and dividend income

          

Loans

   $ 13,464      $ 13,703      $ 13,482        -1.74     -0.13

Taxable securities

     1,499        1,547        1,566        -3.10     -4.28

Tax-exempt securities

     500        500        489        0.00     2.25

Federal funds sold & interest-bearing deposits with banks

     3        3        2        0.00     50.00
  

 

 

   

 

 

   

 

 

     
     15,466        15,753        15,539        -1.82     -0.47
  

 

 

   

 

 

   

 

 

     

Interest expense

          

Deposits

     782        843        803        -7.24     -2.62

Federal Home Loan Bank & Federal Reserve borrowings

     251        278        284        -9.71     -11.62

Junior subordinated debentures

     57        57        60        0.00     -5.00

Federal funds purchased

     2        3        4        -33.33     -50.00
  

 

 

   

 

 

   

 

 

     
     1,092        1,181        1,151        -7.54     -5.13
  

 

 

   

 

 

   

 

 

     

Net interest income

     14,374        14,572        14,388        -1.36     -0.10

Provision for loan losses

     —          —          —          NA        NA   
  

 

 

   

 

 

   

 

 

     

Net interest income after provision for loan losses

     14,374        14,572        14,388        -1.36     -0.10
  

 

 

   

 

 

   

 

 

     

Noninterest income

          

Service charges on deposit accounts

     552        524        490        5.34     12.65

Other fee income, principally bankcard

     294        211        407        39.34     -27.76

Bank-owned life insurance income

     120        118        128        1.69     -6.25

Gain on sale of investment securities

     —          3        —          -100.00     NA   

Impairment losses on investment securities (OTTI)

     —          —          (7     NA        -100.00

Other noninterest income

     352        341        545        3.23     -35.41
  

 

 

   

 

 

   

 

 

     
     1,318        1,197        1,563        10.11     -15.67
  

 

 

   

 

 

   

 

 

     

Noninterest expense

          

Salaries and employee benefits

     5,704        5,939        5,776        -3.96     -1.25

Premises and equipment

     910        958        938        -5.01     -2.99

Data processing

     701        657        651        6.70     7.68

Legal and professional fees

     364        148        407        145.95     -10.57

Business development

     472        344        430        37.21     9.77

FDIC insurance assessment

     221        209        238        5.74     -7.14

Bankcard processing

     1        1        109        0.00     -99.08

Other real estate expense

     111        100        639        11.00     -82.63

Merger related expenses(1)

     470        —          —          NA        NA   

Other noninterest expense

     844        793        857        6.43     -1.52
  

 

 

   

 

 

   

 

 

     
     9,798        9,149        10,045        7.09     -2.46
  

 

 

   

 

 

   

 

 

     

Income before provision for income taxes

     5,894        6,620        5,906        -10.97     -0.20

Provision for income taxes

     2,263        2,189        2,254        3.38     0.40
  

 

 

   

 

 

   

 

 

     

Net income

   $ 3,631      $ 4,431      $ 3,652        -18.05     -0.58
  

 

 

   

 

 

   

 

 

     

Earnings per share:

          

Basic

   $ 0.20      $ 0.25      $ 0.20        -20.00     0.00
  

 

 

   

 

 

   

 

 

     

Diluted

   $ 0.20      $ 0.25      $ 0.20        -20.00     0.00
  

 

 

   

 

 

   

 

 

     

Weighted average shares outstanding:

          

Basic

     17,717,151        17,749,217        17,888,818       

Common stock equivalents attributable to stock-based awards

     222,482        221,241        237,455       
  

 

 

   

 

 

   

 

 

     

Diluted

     17,939,633        17,970,458        18,126,273       
  

 

 

   

 

 

   

 

 

     

PERFORMANCE RATIOS

          

Return on average assets

     0.97     1.18     1.00    

Return on average equity (book)

     7.85     9.69     8.06    

Return on average equity (tangible)(2)

     9.01     11.13     9.28    

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

     4.24     4.28     4.38    

Efficiency ratio(4)

     61.39     57.04     61.95    

 

(1) Represents expenses associated with the pending acquisition of Capital Pacific 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

Year-to-Date Consolidated Income Statements

(In thousands, except share and per share amounts)

(Unaudited)

 

     Twelve months ended    

Year over

Year

 
     December 31,     December 31,    
     2014     2013     % Change  

Interest and dividend income

      

Loans

   $ 53,855      $ 53,275        1.09

Taxable securities

     6,191        5,730        8.05

Tax-exempt securities

     1,971        1,918        2.76

Federal funds sold & interest-bearing deposits with banks

     10        10        0.00
  

 

 

   

 

 

   
     62,027        60,933        1.80
  

 

 

   

 

 

   

Interest expense

      

Deposits

     3,252        3,389        -4.04

Federal Home Loan Bank & Federal Reserve borrowings

     1,088        1,189        -8.49

Junior subordinated debentures

     225        200        12.50

Federal funds purchased

     14        16        -12.50
  

 

 

   

 

 

   
     4,579        4,794        -4.48
  

 

 

   

 

 

   

Net interest income

     57,448        56,139        2.33

Provision for loan losses

     —          250        -100.00
  

 

 

   

 

 

   

Net interest income after provision for loan losses

     57,448        55,889        2.79
  

 

 

   

 

 

   

Noninterest income

      

Service charges on deposit accounts

     2,134        1,926        10.80

Other fee income, principally bankcard

     951        1,624        -41.44

Bank-owned life insurance income

     473        515        -8.16

Loss on sale of investment securities

     (34     (8     325.00

Impairment losses on investment securities (OTTI)

     —          (23     -100.00

Other noninterest income

     1,471        1,792        -17.91
  

 

 

   

 

 

   
     4,995        5,826        -14.26
  

 

 

   

 

 

   

Noninterest expense

      

Salaries and employee benefits

     23,555        22,120        6.49

Premises and equipment

     3,735        3,684        1.38

Data processing

     2,720        2,605        4.41

Legal and professional fees

     1,252        1,867        -32.94

Business development

     1,531        1,805        -15.18

FDIC insurance assessment

     868        912        -4.82

Bankcard processing

     7        527        -98.67

Other real estate expense

     449        2,401        -81.30

Merger related expenses (1)

     470        1,246        -62.28

Other noninterest expense

     3,142        3,565        -11.87
  

 

 

   

 

 

   
     37,729        40,732        -7.37
  

 

 

   

 

 

   

Income before provision for income taxes

     24,714        20,983        17.78

Provision for income taxes

     8,672        7,216        20.18
  

 

 

   

 

 

   

Net income

   $ 16,042      $ 13,767        16.53
  

 

 

   

 

 

   

Earnings per share:

      

Basic

   $ 0.90      $ 0.77        16.88
  

 

 

   

 

 

   

Diluted

   $ 0.89      $ 0.76        17.11
  

 

 

   

 

 

   

Weighted average shares outstanding:

      

Basic

     17,821,580        17,871,439     

Common stock equivalents attributable to stock-based awards

     223,448        188,484     
  

 

 

   

 

 

   

Diluted

     18,045,028        18,059,923     
  

 

 

   

 

 

   

PERFORMANCE RATIOS

      

Return on average assets

     1.09     0.96  

Return on average equity (book)

     8.83     7.61  

Return on average equity (tangible) (2)

     10.14     8.75  

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

     4.30     4.36  

Efficiency ratio (4)

     59.41     64.66  

 

(1) Represents expenses associated with the pending acquisition of Capital Pacific Bank and the 2013 acquisition of Century Bank, respectively.
(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)

 

     December 31,     September 30,     December 31,    

Linked

Quarter

   

Year over

Year

 
     2014     2014     2013     % Change     % Change  

ASSETS

    

Cash and due from banks

   $ 20,929      $ 18,671      $ 19,410        12.09     7.83

Interest-bearing deposits with banks

     4,858        5,841        1,698        -16.83     186.10
  

 

 

   

 

 

   

 

 

     

Total cash and cash equivalents

     25,787        24,512        21,108        5.20     22.17

Securities available-for-sale

     351,946        348,052        347,386        1.12     1.31

Loans, less allowance for loan losses and net deferred fees

     1,029,384        1,019,127        977,928        1.01     5.26

Interest receivable

     4,773        4,759        4,703        0.29     1.49

Federal Home Loan Bank stock

     10,019        10,125        10,425        -1.05     -3.89

Property and equipment, net of accumulated depreciation

     17,820        18,040        18,836        -1.22     -5.39

Goodwill and intangible assets

     23,495        23,525        23,616        -0.13     -0.51

Deferred tax asset

     4,464        7,247        9,598        -38.40     -53.49

Other real estate owned

     13,374        13,177        16,355        1.50     -18.23

Bank-owned life insurance

     16,609        16,488        16,136        0.73     2.93

Other assets

     6,654        4,667        3,635        42.58     83.05
  

 

 

   

 

 

   

 

 

     

Total assets

   $ 1,504,325      $ 1,489,719      $ 1,449,726        0.98     3.77
  

 

 

   

 

 

   

 

 

     

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Deposits

    

Noninterest-bearing demand

   $ 407,311      $ 390,790      $ 366,891        4.23     11.02

Savings and interest-bearing checking

     646,101        598,776        559,632        7.90     15.45

Core time deposits

     57,449        57,645        63,792        -0.34     -9.94
  

 

 

   

 

 

   

 

 

     

Total core deposits (2)

     1,110,861        1,047,211        990,315        6.08     12.17

Other deposits

     98,232        98,024        100,666        0.21     -2.42
  

 

 

   

 

 

   

 

 

     

Total deposits

     1,209,093        1,145,235        1,090,981        5.58     10.83

Federal funds and overnight funds purchased

     —          670        5,150        -100.00     -100.00

Federal Home Loan Bank borrowings

     96,000        145,000        160,000        -33.79     -40.00

Junior subordinated debentures

     8,248        8,248        8,248        0.00     0.00

Accrued interest and other payables

     6,823        8,028        6,163        -15.01     10.71
  

 

 

   

 

 

   

 

 

     

Total liabilities

     1,320,164        1,307,181        1,270,542        0.99     3.91
  

 

 

   

 

 

   

 

 

     

Shareholders’ equity

    

Common stock: 50,000,000 shares authorized. Shares issued and outstanding: 17,717,676 at December 31, 2014, 17,716,776 at September 30, 2014 and 17,891,687 at December 31, 2013

     131,375        131,057        133,835        0.24     -1.84

Retained earnings

     48,984        48,011        45,250        2.03     8.25

Accumulated other comprehensive income

     3,802        3,470        99        9.57     3740.40
  

 

 

   

 

 

   

 

 

     
     184,161        182,538        179,184        0.89     2.78
  

 

 

   

 

 

   

 

 

     

Total liabilities and shareholders’ equity

   $ 1,504,325      $ 1,489,719      $ 1,449,726        0.98     3.77
  

 

 

   

 

 

   

 

 

     

CAPITAL RATIOS

        

Total capital (to risk weighted assets)

     15.73     15.69     16.15    

Tier I capital (to risk weighted assets)

     14.48     14.44     14.90    

Tier I capital (to leverage assets)

     11.33     11.20     11.49    

Tangible common equity (to tangible assets)(1)

     10.85     10.85     10.91    

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

     14.11     14.04     14.18    

OTHER FINANCIAL DATA

          

Shares outstanding at end of period

     17,717,676        17,716,776        17,891,687       

Tangible shareholders’ equity(1)

   $ 160,666      $ 159,013      $ 155,568       

Book value per share

   $ 10.39      $ 10.30      $ 10.01       

Tangible book value per share

   $ 9.07      $ 8.98      $ 8.69       

 

(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)

 

     December 31,     September 30,     December 31,    

Linked

Quarter

   

Year over

Year

 
     2014     2014     2013     % Change     % Change  

LOANS BY TYPE

          

Real estate secured loans:

          

Permanent loans:

          

Multi-family residential

   $ 51,586      $ 50,563      $ 46,217        2.02     11.62

Residential 1-4 family

     47,222        44,610        46,438        5.86     1.69

Owner-occupied commercial

     259,805        249,657        249,311        4.06     4.21

Nonowner-occupied commercial

     201,558        180,648        158,786        11.57     26.94
  

 

 

   

 

 

   

 

 

     

Total permanent real estate loans

     560,171        525,478        500,752        6.60     11.87

Construction loans:

          

Multi-family residential

     8,472        19,178        23,419        -55.82     -63.82

Residential 1-4 family

     28,109        35,421        26,512        -20.64     6.02

Commercial real estate

     18,595        32,946        30,516        -43.56     -39.06

Commercial bare land and acquisition & development

     12,159        12,264        11,473        -0.86     5.98

Residential bare land and acquisition & development

     6,632        6,736        6,990        -1.54     -5.12
  

 

 

   

 

 

   

 

 

     

Total construction real estate loans

     73,967        106,545        98,910        -30.58     -25.22

Total real estate loans

     634,138        632,023        599,662        0.33     5.75

Commercial loans

     406,568        398,702        390,301        1.97     4.17

Consumer loans

     3,862        3,348        3,878        15.35     -0.41

Other loans

     1,443        1,802        928        -19.92     55.50
  

 

 

   

 

 

   

 

 

     

Gross loans

     1,046,011        1,035,875        994,769        0.98     5.15

Deferred loan origination fees

     (990     (1,026     (924     -3.51     7.14
  

 

 

   

 

 

   

 

 

     
     1,045,021        1,034,849        993,845        0.98     5.15

Allowance for loan losses

     (15,637     (15,722     (15,917     -0.54     -1.76
  

 

 

   

 

 

   

 

 

     
   $ 1,029,384      $ 1,019,127      $ 977,928        1.01     5.26
  

 

 

   

 

 

   

 

 

     

SELECTED MARKET LOAN DATA

          

Eugene market gross loans, period-end

   $ 363,953      $ 361,599      $ 334,511        0.65     8.80

Portland market gross loans, period-end

     407,466        389,977        391,295        4.48     4.13

Seattle market gross loans, period-end

     119,095        132,827        132,488        -10.34     -10.11

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

     155,497        151,472        136,475        2.66     13.94
  

 

 

   

 

 

   

 

 

     

Total gross loans, period-end

   $ 1,046,011      $ 1,035,875      $ 994,769        0.98     5.15
  

 

 

   

 

 

   

 

 

     

DENTAL LOAN DATA (2)

          

Local Dental gross loans, period-end

   $ 159,427      $ 164,271      $ 178,673        -2.95     -10.77

National Dental gross loans, period-end

     146,965        142,817        128,595        2.90     14.29
  

 

 

   

 

 

   

 

 

     

Total gross dental loans, period-end

   $ 306,392      $ 307,088      $ 307,268        -0.23     -0.29
  

 

 

   

 

 

   

 

 

     

 

(1) National health care loans include loans to health care professionals, primarily dental practitioners, operating outside of Pacific Continental Bank’s market area. The market area is defined as Oregon and Washington, West of the Cascade Mountain Range.
(2) Dental loans include loans to dental professionals for the purpose of practice expansion, acquisition or other purpose, supported by the cash flows of a dental practice.


PACIFIC CONTINENTAL CORPORATION

Selected Other Financial Information and Ratios

(In thousands)

(Unaudited)

 

     Three months ended     Twelve months ended  
     December 31,     September 30,     December 31,     December 31,     December 31,  
     2014     2014     2013     2014     2013  

BALANCE SHEET AVERAGES

          

Loans, net of deferred fees

   $ 1,028,724      $ 1,038,970      $ 990,566      $ 1,025,889      $ 959,873   

Allowance for loan losses

     (15,675     (15,704     (16,709     (15,707     (16,492
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans, net of allowance

     1,013,049        1,023,266        973,857        1,010,182        943,381   

Securities and short-term deposits

     356,389        351,695        350,101        351,975        366,102   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earning assets

     1,369,438        1,374,961        1,323,958        1,362,157        1,309,483   

Noninterest-earning assets

     115,104        113,786        122,739        114,903        123,730   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Assets

   $ 1,484,542      $ 1,488,747      $ 1,446,697      $ 1,477,060      $ 1,433,213   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest-bearing core deposits(1)

   $ 678,381      $ 645,598      $ 626,161      $ 654,965      $ 631,529   

Noninterest-bearing core deposits(1)

     404,569        391,738        361,046        376,175        336,063   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Core deposits(1)

     1,082,950        1,037,336        987,207        1,031,140        967,592   

Noncore interest-bearing deposits

     93,988        104,561        101,263        101,288        106,574   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Deposits

     1,176,938        1,141,897        1,088,470        1,132,428        1,074,166   

Borrowings

     116,567        158,418        173,038        156,765        173,919   

Other noninterest-bearing liabilities

     7,580        6,975        5,342        6,105        4,271   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities

     1,301,085        1,307,290        1,266,850        1,295,298        1,252,356   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shareholders’ equity (book)

     183,457        181,457        179,847        181,762        180,857   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and equity

   $ 1,484,542      $ 1,488,747      $ 1,446,697      $ 1,477,060      $ 1,433,213   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shareholders’ equity (tangible)(2)

   $ 159,947      $ 157,916      $ 156,154      $ 158,206      $ 157,278   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Period-end earning assets

   $ 1,386,188      $ 1,373,020      $ 1,327,012       
  

 

 

   

 

 

   

 

 

     

SELECTED MARKET DEPOSIT DATA

          

Eugene market core deposits, period-end(1)

   $ 672,527      $ 642,220      $ 588,158       

Portland market core deposits, period-end(1)

     276,453        256,732        249,050       

Seattle market core deposits, period-end(1)

     161,881        148,259        153,107       
  

 

 

   

 

 

   

 

 

     

Total core deposits, period-end(1)

     1,110,861        1,047,211        990,315       

Other deposits, period-end

     98,232        98,024        100,666       
  

 

 

   

 

 

   

 

 

     

Total

   $ 1,209,093      $ 1,145,235      $ 1,090,981       
  

 

 

   

 

 

   

 

 

     

Eugene market core deposits, average(1)

   $ 668,927      $ 634,412      $ 592,179       

Portland market core deposits, average(1)

     263,757        250,029        242,855       

Seattle market core deposits, average(1)

     150,266        152,895        152,173       
  

 

 

   

 

 

   

 

 

     

Total core deposits, average(1)

     1,082,950        1,037,336        987,207       

Other deposits, average

     93,988        104,561        101,263       
  

 

 

   

 

 

   

 

 

     

Total

   $ 1,176,938      $ 1,141,897      $ 1,088,470       
  

 

 

   

 

 

   

 

 

     

NET INTEREST MARGIN RECONCILIATION

          

Yield on average loans

     5.27     5.31     5.49     5.33     5.65

Yield on average securities(3)

     2.53     2.61     2.63     2.62     2.37
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Yield on average earning assets(3)

     4.56     4.62     4.74     4.63     4.73

Rate on average interest-bearing core deposits

     0.28     0.28     0.32     0.29     0.34

Rate on average interest-bearing non-core deposits

     1.29     1.48     1.18     1.35     1.17
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Rate on average interest-bearing deposits

     0.40     0.45     0.44     0.43     0.46

Rate on average borrowings

     1.06     0.85     0.80     0.85     0.81
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of interest-bearing funds

     0.49     0.52     0.51     0.50     0.53
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest rate spread(3)

     4.07     4.11     4.23     4.13     4.21
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin — fully tax equivalent yield(3)

     4.24     4.28     4.38     4.30     4.36
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

     0.03     0.03     0.04     0.04     0.07
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(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, $269 and $263 for the three months ended December 31, 2014, September 30, 2014, and December 31, 2013, respectively, and $1,061 and $1,033 for the twelve months ended December 31, 2014 and 2013, respectively.
(4) During the three months ended December 31, 2014, September 30, 2014 and December 31, 2013, accretion of the fair value adjustment on the Century Bank acquired loans contributed to interest income $90, $95, and $136, respectively, and $526 and $913 for the twelve months ended December 31, 2014 and 2013, respectively.


PACIFIC CONTINENTAL CORPORATION

Nonperforming Assets, Asset Quality Ratios and Allowance for Loan Losses

(In thousands)

(Unaudited)

 

     December 31,     September 30,     December 31,  
     2014     2014     2013  

NONPERFORMING ASSETS

      

Non-accrual loans

      

Real estate secured loans:

      

Permanent loans:

      

Multi-family residential

   $ —        $ —        $ —     

Residential 1-4 family

     321        459        636   

Owner-occupied commercial

     599        787        1,685   

Nonowner-occupied commercial

     906        1,245        136   
  

 

 

   

 

 

   

 

 

 

Total permanent real estate loans

     1,826        2,491        2,457   

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

     1,826        2,491        2,457   

Commercial loans

     869        762        2,886   
  

 

 

   

 

 

   

 

 

 

Total nonaccrual loans

     2,695        3,253        5,343   

90-days past due and accruing interest

     —          —          —     

Total nonperforming loans

     2,695        3,253        5,343   
  

 

 

   

 

 

   

 

 

 

Nonperforming loans guaranteed by government

     (706     (321     (735

Net nonperforming loans

     1,989        2,932        4,608   
  

 

 

   

 

 

   

 

 

 

Other real estate owned

     13,374        13,177        16,355   
  

 

 

   

 

 

   

 

 

 

Total nonperforming assets, net of guaranteed loans

   $ 15,363      $ 16,109      $ 20,963   
  

 

 

   

 

 

   

 

 

 

ASSET QUALITY RATIOS

      

Allowance for loan losses as a percentage of total loans outstanding

     1.50     1.52     1.60

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

     786.17     536.22     345.42

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

     0.03     0.03     0.07

Net nonperforming loans as a percentage of total loans

     0.19     0.28     0.46

Nonperforming assets as a percentage of total assets

     1.02     1.08     1.45

Consolidated classified asset ratio(1)

     24.54     24.27     29.02

Past due as a percentage of total loans (2)

     0.15     0.16     0.23

 

     Three months ended     Twelve months ended  
     December 31,     September 30,     December 31,     December 31,     December 31,  
     2014     2014     2013     2014     2013  

ALLOWANCE FOR LOAN LOSSES

          

Balance at beginning of period

   $ 15,722      $ 15,675      $ 16,802      $ 15,917      $ 16,345   

Provision for loan losses

     —          —          —          —          250   

Loan charge offs

     (181     (23     (1,039     (835     (2,088

Loan recoveries

     96        70        154        555        1,410   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net recoveries (charge offs)

     (85     47        (885     (280     (678
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 15,637      $ 15,722      $ 15,917      $ 15,637      $ 15,917   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(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)

 

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

EARNINGS

            

Net interest income

   $ 14,374      $ 14,572      $ 14,457      $ 14,044      $ 14,388      $ 14,858   

Provision for loan loss

   $ —        $ —        $ —        $ —        $ —        $ —     

Noninterest income

   $ 1,318      $ 1,197      $ 1,156      $ 1,323      $ 1,563      $ 1,447   

Noninterest expense

   $ 9,798      $ 9,149      $ 9,269      $ 9,511      $ 10,045      $ 10,406   

Net income

   $ 3,631      $ 4,431      $ 4,148      $ 3,832      $ 3,652      $ 3,940   

Basic earnings per share

   $ 0.20      $ 0.25      $ 0.23      $ 0.21      $ 0.20      $ 0.22   

Diluted earnings per share

   $ 0.20      $ 0.25      $ 0.23      $ 0.21      $ 0.20      $ 0.22   

Average shares outstanding

     17,717,151        17,749,217        17,889,562        17,897,593        17,888,818        17,888,182   

Average diluted shares outstanding

     17,939,633        17,970,458        18,119,412        18,126,188        18,126,273        18,109,282   

PERFORMANCE RATIOS

            

Return on average assets

     0.97     1.18     1.13     1.06     1.00     1.09

Return on average equity (book)

     7.85     9.69     9.16     8.61     8.06     8.77

Return on average equity (tangible) (1)

     9.01     11.13     10.53     9.90     9.28     10.12

Net interest margin — fully tax equivalent yield (2)

     4.24     4.28     4.34     4.32     4.38     4.57

Efficiency ratio (tax equivalent) (3)

     61.39     57.04     58.38     60.86     61.95     62.81

Full-time equivalent employees

     288        289        283        285        290        285   

CAPITAL

            

Tier 1 leverage ratio

     11.33     11.20     11.26     11.44     11.49     11.56

Tier 1 risk based ratio

     14.48     14.44     14.48     14.95     14.90     15.16

Total risk based ratio

     15.73     15.69     15.73     16.21     16.15     16.42

Book value per share

   $ 10.39      $ 10.30      $ 10.20      $ 10.13      $ 10.01      $ 10.04   

Regular cash dividend per share

   $ 0.10      $ 0.10      $ 0.10      $ 0.10      $ 0.10      $ 0.09   

Special cash dividend per share

   $ 0.05      $ 0.03      $ 0.11      $ 0.10      $ 0.12      $ 0.12   

ASSET QUALITY

            

Allowance for loan losses (ALL)

   $ 15,637      $ 15,722      $ 15,675      $ 15,394      $ 15,917      $ 16,802   

Non performing loans (NPLs) net of government guarantees

   $ 1,989      $ 2,932      $ 4,606      $ 4,539      $ 4,608      $ 5,155   

Non performing assets (NPAs) net of government guarantees

   $ 15,363      $ 16,109      $ 16,137      $ 16,070      $ 20,963      $ 21,757   

Net loan (recoveries) charge offs

   $ 85      $ (47   $ (281   $ 523      $ 885      $ (499

ALL as a percentage of gross loans

     1.50     1.52     1.52     1.51     1.60     1.72

ALL as a % NPLs, net of government guarantees

     786.17     536.22     340.32     339.15     345.42     325.94

Net loan charge offs (recoveries) to average loans

     0.03     -0.02     -0.11     0.21     0.35     -0.21

Net NPLs as a percentage of total loans

     0.19     0.28     0.45     0.44     0.46     0.53

Nonperforming assets as a percentage of total assets

     1.02     1.08     1.08     1.09     1.45     1.50

Consolidated classified asset ratio(4)

     24.54     24.27     24.72     26.82     29.02     30.25

Past due as a percentage of total loans(5)

     0.15     0.16     0.08     0.20     0.23     0.37

END OF PERIOD BALANCES

            

Total securities and short term deposits

   $ 356,804      $ 353,893      $ 359,869      $ 345,121      $ 349,084      $ 363,547   

Total loans net of allowance

   $ 1,029,384      $ 1,019,127      $ 1,014,346      $ 1,004,751      $ 977,928      $ 960,916   

Total earning assets

   $ 1,386,188      $ 1,373,020      $ 1,374,215      $ 1,349,872      $ 1,327,012      $ 1,324,463   

Total assets

   $ 1,504,325      $ 1,489,719      $ 1,498,763      $ 1,471,591      $ 1,449,726      $ 1,454,878   

Total non-interest bearing deposits

   $ 407,311      $ 390,790      $ 397,942      $ 340,464      $ 366,890      $ 379,598   

Core deposits (6)

   $ 1,110,861      $ 1,047,211      $ 1,026,542      $ 990,933      $ 990,315      $ 1,015,651   

Total deposits

   $ 1,209,093      $ 1,145,235      $ 1,132,654      $ 1,097,355      $ 1,090,981      $ 1,117,529   

AVERAGE BALANCES

            

Total securities and short term deposits

   $ 356,389      $ 351,695      $ 348,985      $ 350,774      $ 353,061      $ 355,059   

Total loans net of allowance

   $ 1,013,049      $ 1,023,266      $ 1,011,391      $ 992,655      $ 973,857      $ 958,372   

Total earning assets

   $ 1,369,438      $ 1,374,961      $ 1,360,376      $ 1,343,429      $ 1,326,918      $ 1,313,431   

Total assets

   $ 1,484,542      $ 1,488,747      $ 1,473,470      $ 1,461,095      $ 1,446,697      $ 1,435,257   

Total non-interest bearing deposits

   $ 404,569      $ 391,738      $ 362,204      $ 345,369      $ 361,046      $ 346,692   

Core deposits (6)

   $ 1,082,950      $ 1,037,336      $ 1,010,734      $ 992,482      $ 987,207      $ 972,487   

Total deposits

   $ 1,176,938      $ 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.