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8-K - 8-K - PACIFIC CONTINENTAL CORPd917323d8k.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 First Quarter 2015 Results

Organic growth and successful acquisition drive first quarter results.

EUGENE, Ore., April 29, 2015 – Pacific Continental Corporation (Nasdaq: PCBK), the holding company of Pacific Continental Bank, today reported financial results for the first quarter 2015.

Recent highlights:

 

    Completed acquisition and core system integration of Capital Pacific Bank during first quarter.

 

    Achieved organic growth in average core deposits of $63.2 million or 5.84% during first quarter.

 

    Achieved organic loan growth of $10.0 million during the first quarter 2015.

 

    Generated $52.9 million of approved and unfunded loan commitments during first quarter.

 

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

 

    Awarded the Raymond James Community Bankers Cup that recognizes the top 10% community banks based on various profitability, operational efficiency, and balance sheet metrics.

 

    Recognized for the sixteenth consecutive year by the Oregon Business magazine as one of the 100 Best Companies to Work For in Oregon.

Capital Pacific Bank acquisition

The Capital Pacific Bank acquisition, announced on November 19, 2014, was successfully closed on March 6, 2015. System integration was also successfully completed during the weekend of March 20, 2015. A summary of the assets and liabilities acquired through the transaction is provided in the financial tables accompanying this press release.

Net income

Net income for first quarter 2015 was $2.8 million or $0.15 per diluted share compared to net income of $3.8 million or $0.21 per diluted share in first quarter 2014. Merger expense related to the acquisition of Capital Pacific Bank totaled $1.8 million in the first quarter and reduced net income by approximately $1.2 million or $0.07 per share.

“Our first quarter results, combined with the completion of the Capital Pacific Bank acquisition in Portland, Oregon and successful integration of systems demonstrated our continued progress toward achievement of our strategic initiatives,” said Roger Busse, chief executive officer. “Further the Capital Pacific transaction will provide meaningful scale to our Portland operations, as well as add to our financial performance during the year and be accretive to our shareholders.”

Core deposits

Period-end Company-defined core deposits at March 31, 2015, were $1.42 billion and included $223.0 million of deposits acquired in the Capital Pacific transaction. Organically, outstanding core deposits were up $83.5 million or 7.52% during the first quarter 2015. Average core deposits, which removes daily volatility in balances, for the first quarter 2015 were $1.20 billion compared to $1.08 billion and $992.5 million for fourth quarter 2015 and first quarter 2014, respectively. Removing the $54.4 million in outstanding average Capital Pacific deposits, organic average core deposits in first quarter 2015 were up $63.2 million or 5.84% over the prior quarter. At period-end March 31, 2015, noninterest-bearing demand deposits totaled $503.7 million and represented 35.54% of core deposits.

“Our bankers continued to effectively execute our business strategies and were successful in developing new relationships,” said Casey Hogan, chief operating officer. “Our pipelines continue to be strong, and we anticipate loan and deposit growth to continue.”


Loans

Outstanding gross loans at March 31, 2015, were $1.26 billion and included $199.9 million of loans (net of fair value marks) acquired in the Capital Pacific transaction. Organic loan growth during the first quarter 2015 of $10.00 million was primarily attributable to increased commercial and industrial lending and local real estate lending. In addition to organic loan growth, during the first quarter, the Company originated loans with unfunded commitments at March 31, 2015 totaling $52.9 million, which were primarily centered in construction. This is up from the $21.1 million in originated unfunded loan commitments in the first quarter 2014. Loans to dental professionals were up $4.6 million from the previous quarter. The Company continued to see expansion of its national dental lending, but the more seasoned local dental portfolio remained relatively unchanged as new production was offset by normal principal payments. At March 31, 2015, loans to dental practitioners totaled $311.0 million and represented 24.76% of the loan portfolio compared to 29.29% at December 31, 2014. The reduction in the concentration of dental loans during the first quarter 2015 was the result of loans added to the portfolio from the acquisition of Capital Pacific Bank.

Credit quality and statistics

For the eighth consecutive quarter, the Company made no provision for loan losses, reflecting the credit quality of the loan portfolio. With the acquisition of the Capital Pacific loan portfolio, the allowance for loan losses as a percentage of outstanding loans at March 31, 2015, declined to 1.25% compared to 1.50% at December 31, 2014. This was a result of the Capital Pacific acquired loans included at their fair value, net of any credit risk adjustments. The allowance for loan losses as a percentage of nonperforming loans net of guarantees remained very strong at 569.74%. During the first quarter 2015, the Company recorded net loan recoveries totaling $87 thousand.

At March 31, 2015, nonperforming assets, net of government guarantees, totaled $16.8 million, or 0.94% of total assets, compared to $15.4 million or 1.02% of total assets at December 31, 2014. Nonperforming assets at March 31, 2015 were comprised of $2.6 million of nonperforming loans, net of government guarantees, and $14.2 million in other real estate owned. Loans past-due 30-89 days were 0.35% of total loans at March 31, 2015, compared to 0.15% of total loans at December 31, 2014.

Net interest margin

The first quarter 2015 net interest margin averaged 4.27%, an increase of 3 basis points over the fourth quarter 2014 net interest margin, and a 5 basis point decline from the first quarter 2014 net interest margin. The improvement in the linked-quarter net interest margin was primarily due to accretion of loan fair value marks, which added 11 basis points to the core margin. During the first quarter 2015, the net accretion of loan fair value marks was $387 thousand of which $138 thousand was related to the 2013 acquisition of Century Bank and $249 thousand related to the first quarter 2015 acquisition of Capital Pacific Bank.

Noninterest income and expense

First quarter 2015 noninterest income was $1.3 million, down $42 thousand from fourth quarter 2014, and down $47 thousand from first quarter 2014. First quarter 2015 noninterest income included $53 thousand of gains on the sale of securities and a $23 thousand increase in service charge income, which was offset by a decline in bankcard income when compared to the prior quarter.

Noninterest expense in first quarter 2015 was up $2.2 million over fourth quarter 2014, primarily due to the $1.8 million of merger expense recorded during the current quarter. Increased personnel expense of $705 thousand in first quarter 2015 over fourth quarter 2014 accounted for the majority of the remaining linked-quarter expense increase. This was primarily due to the salary and benefit costs of former Capital Pacific employees who will continue on with Pacific Continental.

Capital levels

The Company’s consolidated capital ratios continued to be above the minimum for the FDIC’s minimum “well-capitalized” designation. At March 31, 2015, the Company’s Tier 1 leverage ratio, Common Equity Tier 1 risk-based capital ratio, Tier 1 risk-based capital ratio, and Total risk-based capital ratios were 11.31%, 11.41%, 11.97%, and 13.08%, respectively. This is after the application of the Basel III regulatory capital framework. The FDIC’s minimum “well-capitalized” designation ratios for these metrics were 5.00%, 6.50%, 8.00% and 10.00%, respectively.

Non-GAAP Financial Measures

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


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

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

 

     March 31,      December 31,      March 31,  
     2015      2014      2014  
     (In thousands)  

Total shareholders’ equity

   $ 210,651       $ 184,161       $ 181,398   

Subtract:

        

Goodwill

     39,032         22,881         22,881   

Core deposit intangible assets

     4,274         614         704   
  

 

 

    

 

 

    

 

 

 

Tangible shareholders’ equity (non-GAAP)

$ 167,345    $ 160,666    $ 157,813   
  

 

 

    

 

 

    

 

 

 

Total assets

$ 1,780,849    $ 1,504,325    $ 1,471,591   

Subtract:

Goodwill

  39,032      22,881      22,881   

Core deposit intangible assets

  4,274      614      704   
  

 

 

    

 

 

    

 

 

 

Tangible assets (non-GAAP)

$ 1,737,543    $ 1,480,830    $ 1,448,006   
  

 

 

    

 

 

    

 

 

 

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 first quarter 2015 on Thursday, April 30, 2015, at 11:00 a.m. Pacific / 2:00 p.m. Eastern. To listen to the conference call, interested parties should call (855) 215-7498 Passcode: 1554389. Following the formal remarks, a question and answer session will be open to all interested parties. The webcast will be available via Pacific Continental’s website www.therightbank.com. To listen to the live audio webcast, click on the webcast presentation link on the Company’s home page a few minutes before the presentation is scheduled to begin. An audio webcast replay is typically available within twenty-four hours following the live webcast and will be archived for one year on the Pacific Continental website. Any questions regarding the conference call presentation or webcast should be directed to Shannon Coffin, executive administrative assistant, at 541-686-8685.

About Pacific Continental Bank

Pacific Continental Bank, the operating subsidiary of Pacific Continental Corporation, delivers highly personalized services through fifteen banking offices in Oregon and Washington. The Bank also operates loan production offices in Tacoma, Washington and Denver, Colorado. Pacific Continental, with $1.8 billion in assets, has established one of the most unique and attractive metropolitan branch networks in the Pacific Northwest with offices in three of the region’s largest markets including Seattle, Portland and Eugene. Pacific Continental targets the banking needs of community-based businesses, health care professionals, professional service providers and nonprofit organizations.

Since its founding in 1972, Pacific Continental Bank has been honored with numerous awards and recognitions from highly regarded third-party organizations including The Seattle Times, the Portland Business Journal, the Seattle Business magazine and Oregon Business magazine. A complete list of the company’s awards and recognitions – as well as supplementary information about Pacific Continental Bank – can be found online at www.therightbank.com. Pacific Continental Corporation’s shares are listed on the Nasdaq Global Select Market under the symbol “PCBK” and are a component of the Russell 2000 Index.

Forward-Looking Statement Safe Harbor

This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “anticipates,” “targets,” “expects,” “estimates,” “intends,” “plans,” “goals,” “believes” and other similar expressions or future or conditional verbs such as “will,” “should,” “would” and “could.” The forward-looking statements made represent Pacific Continental’s current estimates, projections, expectations, plans or forecasts of its future results and revenues, including but not limited to statements about performance, loan growth, capital position,


liquidity, credit quality, credit quality trends, competition and economic conditions generally and the impact and effects of recent acquisitions. These statements are not guarantees of future results or performance and involve certain risks, uncertainties and assumptions and 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)

 

     Three months ended     Linked     Year over  
     March 31,     December 31,     March 31,     Quarter     Year  
     2015     2014     2014     % Change     % Change  

Interest and dividend income

          

Loans

   $ 14,185      $ 13,464      $ 13,174        5.36     7.67

Taxable securities

     1,375        1,499        1,532        -8.27     -10.25

Tax-exempt securities

     503        500        483        0.60     4.14

Federal funds sold & interest-bearing deposits with banks

     5        3        2        66.67     150.00
  

 

 

   

 

 

   

 

 

     
  16,068      15,466      15,191      3.89   5.77
  

 

 

   

 

 

   

 

 

     

Interest expense

Deposits

  810      782      806      3.58   0.50

Federal Home Loan Bank & Federal Reserve borrowings

  228      251      280      -9.16   -18.57

Junior subordinated debentures

  56      57      56      -1.75   0.00

Federal funds purchased

  2      2      5      0.00   -60.00
  

 

 

   

 

 

   

 

 

     
  1,096      1,092      1,147      0.37   -4.45
  

 

 

   

 

 

   

 

 

     

Net interest income

  14,972      14,374      14,044      4.16   6.61

Provision for loan losses

  —        —        —        NA      NA   
  

 

 

   

 

 

   

 

 

     

Net interest income after provision for loan losses

  14,972      14,374      14,044      4.16   6.61
  

 

 

   

 

 

   

 

 

     

Noninterest income

Service charges on deposit accounts

  575      552      518      4.17   11.00

Bankcard income

  197      294      217      -32.99   -9.22

Bank-owned life insurance income

  109      120      117      -9.17   -6.84

Gain on sale of investment securities

  53      —        63      NA      -15.87

Other noninterest income

  342      352      408      -2.84   -16.18
  

 

 

   

 

 

   

 

 

     
  1,276      1,318      1,323      -3.19   -3.55
  

 

 

   

 

 

   

 

 

     

Noninterest expense

Salaries and employee benefits

  6,409      5,704      5,819      12.36   10.14

Premises and equipment

  980      910      943      7.69   3.92

Data processing

  684      701      670      -2.43   2.09

Legal and professional fees

  400      364      487      9.89   -17.86

Business development

  353      472      375      -25.21   -5.87

FDIC insurance assessment

  212      221      220      -4.07   -3.64

Other real estate expense

  241      111      223      117.12   8.07

Merger related expenses (1)

  1,836      470      —        290.64   NA   

Other noninterest expense

  857      845      774      1.42   10.72
  

 

 

   

 

 

   

 

 

     
  11,972      9,798      9,511      22.19   25.88
  

 

 

   

 

 

   

 

 

     

Income before provision for income taxes

  4,276      5,894      5,856      -27.45   -26.98

Provision for income taxes

  1,474      2,263      2,024      -34.87   -27.17
  

 

 

   

 

 

   

 

 

     

Net income

$ 2,802    $ 3,631    $ 3,832      -22.83   -26.88
  

 

 

   

 

 

   

 

 

     

Earnings per share:

Basic

$ 0.15    $ 0.20    $ 0.21      -25.00   -28.57
  

 

 

   

 

 

   

 

 

     

Diluted

$ 0.15    $ 0.20    $ 0.21      -25.00   -28.57
  

 

 

   

 

 

   

 

 

     

Weighted average shares outstanding:

Basic

  18,232,076      17,717,270      17,897,593   

Common stock equivalents attributable to stock-based awards

  212,895      222,482      228,595   
  

 

 

   

 

 

   

 

 

     

Diluted

  18,444,971      17,939,752      18,126,188   
  

 

 

   

 

 

   

 

 

     

PERFORMANCE RATIOS

Return on average assets

  0.72   0.97   1.06

Return on average equity (book)

  5.91   7.85   8.61

Return on average equity (tangible) (2)

  7.05   9.01   9.90

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

  4.27   4.24   4.32

Efficiency ratio (4)

  72.47   61.39   60.86

 

(1) Represents expenses associated with the acquisition of Capital Pacific Bank, completed during the first quarter 2015.
(2) Tangible equity excludes goodwill and core deposit intangible assets related to acquisitions.
(3) Net interest margin is reported on a tax-equivalent yield basis at a 35% tax rate.
(4)  Efficiency ratio is noninterest expense as a percent of net interest income (on a tax-equivalent basis) plus noninterest income.


PACIFIC CONTINENTAL CORPORATION

Consolidated Balance Sheets

(In thousands, except share amounts)

(Unaudited)

 

                       Linked     Year over  
     March 31,     December 31,     March 31,     Quarter     Year  
     2015     2014     2014     % Change     % Change  

ASSETS

          

Cash and due from banks

   $ 25,718      $ 20,929      $ 24,455        22.88     5.16

Interest-bearing deposits with banks

     12,491        4,858        3,129        157.12     299.20
  

 

 

   

 

 

   

 

 

     

Total cash and cash equivalents

  38,209      25,787      27,584      48.17   38.52

Securities available-for-sale

  379,497      351,946      341,992      7.83   10.97

Loans, less allowance for loan losses and net deferred fees

  1,238,982      1,029,384      1,004,751      20.36   23.31

Interest receivable

  5,387      4,773      4,693      12.86   14.79

Federal Home Loan Bank stock

  10,531      10,019      10,327      5.11   1.98

Property and equipment, net of accumulated depreciation

  17,932      17,820      18,621      0.63   -3.70

Goodwill and intangible assets

  43,306      23,495      23,585      84.32   83.62

Deferred tax asset

  4,887      4,464      8,572      9.48   -42.99

Taxes receivable

  656      —        —        NA      NA   

Other real estate owned

  14,167      13,374      11,531      5.93   22.86

Bank-owned life insurance

  22,401      16,609      16,253      34.87   37.83

Other assets

  4,894      6,654      3,682      -26.45   32.92
  

 

 

   

 

 

   

 

 

     

Total assets

$ 1,780,849    $ 1,504,325    $ 1,471,591      18.38   21.02
  

 

 

   

 

 

   

 

 

     

LIABILITIES AND SHAREHOLDERS’ EQUITY

Deposits

Noninterest-bearing demand

$ 503,735    $ 407,311    $ 340,464      23.67   47.96

Savings and interest-bearing checking

  833,325      646,101      588,822      28.98   41.52

Core time deposits

  80,337      57,449      61,647      39.84   30.32
  

 

 

   

 

 

   

 

 

     

Total core deposits (2)

  1,417,397      1,110,861      990,933      27.59   43.04

Non-core time deposits

  79,350      98,232      106,422      -19.22   -25.44
  

 

 

   

 

 

   

 

 

     

Total deposits

  1,496,747      1,209,093      1,097,355      23.79   36.40

Federal funds and overnight funds purchased

  —        —        5,620      NA      -100.00

Federal Home Loan Bank borrowings

  61,000      96,000      175,000      -36.46   -65.14

Junior subordinated debentures

  8,248      8,248      8,248      0.00   0.00

Accrued interest and other payables

  4,203      6,823      3,970      -38.40   5.87
  

 

 

   

 

 

   

 

 

     

Total liabilities

  1,570,198      1,320,164      1,290,193      18.94   21.70
  

 

 

   

 

 

   

 

 

     

Shareholders’ equity

Common stock: 50,000,000 shares authorized. Shares issued and outstanding: 19,496,920 at March 31, 2015, 17,717,676 at December 31, 2014 and 17,909,906 at March 31, 2014

  155,298      131,375      134,293      18.21   15.64

Retained earnings

  50,014      48,984      45,503      2.10   9.91

Accumulated other comprehensive income

  5,339      3,802      1,602      40.43   233.27
  

 

 

   

 

 

   

 

 

     
  210,651      184,161      181,398      14.38   16.13
  

 

 

   

 

 

   

 

 

     

Total liabilities and shareholders’ equity

$ 1,780,849    $ 1,504,325    $ 1,471,591      18.38   21.02
  

 

 

   

 

 

   

 

 

     

CAPITAL RATIOS

Total capital (to risk weighted assets) (3)

  13.08   15.73   16.21

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

  11.97   14.48   14.95

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

  11.41   NA      NA   

Tier I capital (to leverage assets) (3)

  11.31   11.33   11.44

Tangible common equity (to tangible assets)(1)

  9.63   10.85   10.90

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

  11.58   14.11   14.37

OTHER FINANCIAL DATA

Shares outstanding at end of period

  19,496,920      17,717,676      17,909,906   

Tangible shareholders’ equity(1)

$ 167,345    $ 160,666    $ 157,813   

Book value per share

$ 10.80    $ 10.39    $ 10.13   

Tangible book value per share

$ 8.58    $ 9.07    $ 8.81   

 

(1)  Tangible common equity excludes goodwill and core deposit intangible assets related to acquisitions.
(2)  Core deposits include demand, interest checking, money market, savings, and local time deposits, including local nonpublic time deposits in excess of $100 thousand.
(3)  In first quarter 2015 Basel III capital framework methodology was implemented for all banks. The current period capital ratios have been compiled based on the new methodology. The prior period capital ratios have not been restated in conformity with the new methodology.


PACIFIC CONTINENTAL CORPORATION

Loans by Type

(In thousands)

(Unaudited)

 

                       Linked     Year over  
     March 31,     December 31,     March 31,     Quarter     Year  
     2015     2014     2014     % Change     % Change  

LOANS BY TYPE

          

Real estate secured loans:

          

Permanent loans:

          

Multi-family residential

   $ 69,968      $ 51,586      $ 51,182        35.63     36.70

Residential 1-4 family

     55,702        47,222        46,557        17.96     19.64

Owner-occupied commercial

     337,058        259,805        250,211        29.73     34.71

Nonowner-occupied commercial

     256,119        201,558        168,888        27.07     51.65
  

 

 

   

 

 

   

 

 

     

Total permanent real estate loans

  718,847      560,171      516,838      28.33   39.09

Construction loans:

Multi-family residential

  7,318      8,472      22,717      -13.62   -67.79

Residential 1-4 family

  28,913      28,109      25,859      2.86   11.81

Commercial real estate

  25,477      18,595      34,936      37.01   -27.08

Commercial bare land and acquisition & development

  11,987      12,159      11,456      -1.41   4.64

Residential bare land and acquisition & development

  6,272      6,632      7,011      -5.43   -10.54
  

 

 

   

 

 

   

 

 

     

Total construction real estate loans

  79,967      73,967      101,979      8.11   -21.58

Total real estate loans

  798,814      634,138      618,817      25.97   29.09

Commercial loans

  449,793      406,568      397,738      10.63   13.09

Consumer loans

  3,528      3,862      3,518      -8.65   0.28

Other loans

  3,742      1,443      1,042      159.32   259.12
  

 

 

   

 

 

   

 

 

     

Gross loans

  1,255,877      1,046,011      1,021,115      20.06   22.99

Deferred loan origination fees

  (1,171   (990   (970   18.28   20.72
  

 

 

   

 

 

   

 

 

     
  1,254,706      1,045,021      1,020,145      20.07   22.99

Allowance for loan losses

  (15,724   (15,637   (15,394   0.56   2.14
  

 

 

   

 

 

   

 

 

     
$ 1,238,982    $ 1,029,384    $ 1,004,751      20.36   23.31
  

 

 

   

 

 

   

 

 

     

SELECTED MARKET LOAN DATA

Eugene market gross loans, period-end

$ 358,129    $ 363,953    $ 347,233      -1.60   3.14

Portland market gross loans, period-end

  612,762      407,466      400,537      50.38   52.99

Seattle market gross loans, period-end

  119,306      119,095      131,492      0.18   -9.27

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

  165,680      155,497      141,853      6.55   16.80
  

 

 

   

 

 

   

 

 

     

Total gross loans, period-end

$ 1,255,877    $ 1,046,011    $ 1,021,115      20.06   22.99
  

 

 

   

 

 

   

 

 

     

DENTAL LOAN DATA (2)

Local Dental gross loans, period-end

$ 159,726    $ 159,427    $ 172,022      0.19   -7.15

National Dental gross loans, period-end

  151,280      146,965      133,733      2.94   13.12
  

 

 

   

 

 

   

 

 

     

Total gross dental loans, period-end

$ 311,006    $ 306,392    $ 305,755      1.51   1.72
  

 

 

   

 

 

   

 

 

     

 

(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  
     March 31,     December 31,     March 31,  
     2015     2014     2014  

BALANCE SHEET AVERAGES

      

Loans, net of deferred fees

   $ 1,093,381      $ 1,028,724      $ 1,008,561   

Allowance for loan losses

     (15,675     (15,675     (15,906
  

 

 

   

 

 

   

 

 

 

Loans, net of allowance

  1,077,706      1,013,049      992,655   

Securities and short-term deposits

  371,061      356,389      350,774   
  

 

 

   

 

 

   

 

 

 

Earning assets

  1,448,767      1,369,438      1,343,429   

Noninterest-earning assets

  125,000      115,104      117,666   
  

 

 

   

 

 

   

 

 

 

Assets

$ 1,573,767    $ 1,484,542    $ 1,461,095   
  

 

 

   

 

 

   

 

 

 

Interest-bearing core deposits(1)

$ 760,838    $ 678,381    $ 647,114   

Noninterest-bearing core deposits(1)

  439,780      404,569      345,369   
  

 

 

   

 

 

   

 

 

 

Core deposits(1)

  1,200,618      1,082,950      992,483   

Noncore interest-bearing deposits

  82,986      93,988      101,421   
  

 

 

   

 

 

   

 

 

 

Deposits

  1,283,604      1,176,938      1,093,904   

Borrowings

  91,051      116,567      181,381   

Other noninterest-bearing liabilities

  6,772      7,580      5,280   
  

 

 

   

 

 

   

 

 

 

Liabilities

  1,381,427      1,301,085      1,280,565   
  

 

 

   

 

 

   

 

 

 

Shareholders’ equity (book)

  192,340      183,457      180,530   
  

 

 

   

 

 

   

 

 

 

Liabilities and equity

$ 1,573,767    $ 1,484,542    $ 1,461,095   
  

 

 

   

 

 

   

 

 

 

Shareholders’ equity (tangible)(2)

$ 161,247    $ 159,947    $ 156,929   
  

 

 

   

 

 

   

 

 

 

Period-end earning assets

$ 1,630,970    $ 1,386,188    $ 1,349,872   
  

 

 

   

 

 

   

 

 

 

SELECTED MARKET DEPOSIT DATA

Eugene market core deposits, period-end(1)

$ 742,397    $ 672,527    $ 604,505   

Portland market core deposits, period-end(1)

  516,976      276,453      234,631   

Seattle market core deposits, period-end(1)

  158,024      161,881      151,797   
  

 

 

   

 

 

   

 

 

 

Total core deposits, period-end(1)

  1,417,397      1,110,861      990,933   

Other deposits, period-end

  79,350      98,232      106,422   
  

 

 

   

 

 

   

 

 

 

Total

$ 1,496,747    $ 1,209,093    $ 1,097,355   
  

 

 

   

 

 

   

 

 

 

Eugene market core deposits, average(1)

$ 711,718    $ 668,927    $ 602,977   

Portland market core deposits, average(1)

  332,791      263,757      236,945   

Seattle market core deposits, average(1)

  156,109      150,266      152,561   
  

 

 

   

 

 

   

 

 

 

Total core deposits, average(1)

  1,200,618      1,082,950      992,483   

Other deposits, average

  82,986      93,988      101,421   
  

 

 

   

 

 

   

 

 

 

Total

$ 1,283,604    $ 1,176,938    $ 1,093,904   
  

 

 

   

 

 

   

 

 

 

NET INTEREST MARGIN RECONCILIATION

Yield on average loans (3)

  5.34   5.27   5.38

Yield on average securities(4)

  2.35   2.53   2.63
  

 

 

   

 

 

   

 

 

 

Yield on average earning assets(4)

  4.57   4.56   4.66

Rate on average interest-bearing core deposits

  0.28   0.28   0.31

Rate on average interest-bearing non-core deposits

  1.41   1.29   1.26
  

 

 

   

 

 

   

 

 

 

Rate on average interest-bearing deposits

  0.39   0.40   0.44

Rate on average borrowings

  1.27   1.06   0.76
  

 

 

   

 

 

   

 

 

 

Cost of interest-bearing funds

  0.48   0.49   0.50
  

 

 

   

 

 

   

 

 

 

Interest rate spread(4)

  4.10   4.07   4.16
  

 

 

   

 

 

   

 

 

 

Net interest margin - fully tax equivalent yield(4)

  4.27   4.24   4.32
  

 

 

   

 

 

   

 

 

 

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

  0.11   0.03   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) Interest income includes recognized loan origination fees of $147, $149 and $129 for the three months ended March 31, 2015, December 31, 2014 and March 31, 2014, respectively.
(4)  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 $271, $269 and $260 for the three months ended March 31, 2015, December 31, 2014, and March 31, 2014, respectively.
(5)  During the three months ended March 31, 2015, December 31, 2014 and March 31, 2014, accretion of the fair value adjustment on acquired loans contributed to interest income of $387, $90, and $225, respectively.


PACIFIC CONTINENTAL CORPORATION

Nonperforming Assets, Asset Quality Ratios and Allowance for Loan Losses

(Dollars in thousands, except per share data)

(Unaudited)

 

     March 31,     December 31,     March 31,  
     2015     2014     2014  

NONPERFORMING ASSETS

      

Non-accrual loans

      

Real estate secured loans:

      

Permanent loans:

      

Multi-family residential

   $ —        $ —        $ —     

Residential 1-4 family

     830        321        752   

Owner-occupied commercial

     1,117        599        1,651   

Nonowner-occupied commercial

     897        906        136   
  

 

 

   

 

 

   

 

 

 

Total permanent real estate loans

  2,844      1,826      2,539   

Construction loans:

Multi-family residential

  —        —        —     

Residential 1-4 family

  166      —        —     

Commercial real estate

  —        —        —     

Commercial bare land and acquisition & development

  —        —        —     

Residential bare land and acquisition & development

  —        —        —     
  

 

 

   

 

 

   

 

 

 

Total construction real estate loans

  166      —        —     
  

 

 

   

 

 

   

 

 

 

Total real estate loans

  3,010      1,826      2,539   

Commercial loans

  1,067      869      2,623   
  

 

 

   

 

 

   

 

 

 

Total nonaccrual loans

  4,077      2,695      5,162   

90-days past due and accruing interest

  —        —        —     

Total nonperforming loans

  4,077      2,695      5,162   
  

 

 

   

 

 

   

 

 

 

Nonperforming loans guaranteed by government

  (1,442   (706   (623

Net nonperforming loans

  2,635      1,989      4,539   
  

 

 

   

 

 

   

 

 

 

Other real estate owned

  14,167      13,374      11,531   
  

 

 

   

 

 

   

 

 

 

Total nonperforming assets, net of guaranteed loans

$ 16,802    $ 15,363    $ 16,070   
  

 

 

   

 

 

   

 

 

 

ASSET QUALITY RATIOS

Allowance for loan losses as a percentage of total loans outstanding

  1.25   1.49   1.51

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

  596.74   786.17   339.15

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

  -0.03   0.03   0.21

Net nonperforming loans as a percentage of total loans

  0.21   0.19   0.44

Nonperforming assets as a percentage of total assets

  0.94   1.02   1.09

Consolidated classified asset ratio(1)

  27.60   24.54   26.82

Past due as a percentage of total loans (2)

  0.35   0.15   0.20
     Three months ended  
     March 31,     December 31,     March 31,  
     2015     2014     2014  

ALLOWANCE FOR LOAN LOSSES

      

Balance at beginning of period

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

Provision for loan losses

     —          —          —     

Loan charge offs

     (73     (181     (601

Loan recoveries

     160        96        78   
  

 

 

   

 

 

   

 

 

 

Net recoveries (charge offs)

  87      (85   (523
  

 

 

   

 

 

   

 

 

 

Balance at end of period

$ 15,724    $ 15,637    $ 15,394   
  

 

 

   

 

 

   

 

 

 

 

(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

(Dollars in thousands, except per share data)

(Unaudited)

 

     1st Quarter     4th Quarter     3rd Quarter     2nd Quarter     1st Quarter  
     2015     2014     2014     2014     2014  

EARNINGS

          

Net interest income

   $ 14,972      $ 14,374      $ 14,572      $ 14,457      $ 14,044   

Provision for loan loss

   $ —        $ —        $ —        $ —        $ —     

Noninterest income

   $ 1,276      $ 1,318      $ 1,197      $ 1,156      $ 1,323   

Noninterest expense

   $ 11,972      $ 9,798      $ 9,149      $ 9,269      $ 9,511   

Net income

   $ 2,802      $ 3,631      $ 4,431      $ 4,148      $ 3,832   

Basic earnings per share

   $ 0.15      $ 0.20      $ 0.25      $ 0.23      $ 0.21   

Diluted earnings per share

   $ 0.15      $ 0.20      $ 0.25      $ 0.23      $ 0.21   

Average shares outstanding

     18,232,076        17,717,270        17,749,217        17,889,562        17,897,593   

Average diluted shares outstanding

     18,444,971        17,939,752        17,970,458        18,119,412        18,126,188   

PERFORMANCE RATIOS

          

Return on average assets

     0.72     0.97     1.18     1.13     1.06

Return on average equity (book)

     5.91     7.85     9.69     9.16     8.61

Return on average equity (tangible) (1)

     7.05     9.01     11.13     10.53     9.90

Net interest margin - fully tax equivalent yield (2)

     4.27     4.24     4.28     4.34     4.32

Efficiency ratio (tax equivalent) (3)

     72.47     61.39     57.04     58.38     60.86

Full-time equivalent employees

     317        288        289        283        285   

CAPITAL

          

Tier 1 leverage ratio

     11.31     11.33     11.20     11.26     11.44

Tier 1 risk based ratio

     11.97     14.48     14.44     14.48     14.95

Total risk based ratio

     13.08     15.73     15.69     15.73     16.21

Book value per share

   $ 10.80      $ 10.39      $ 10.30      $ 10.20      $ 10.13   

Regular cash dividend per share

   $ 0.10      $ 0.10      $ 0.10      $ 0.10      $ 0.10   

Special cash dividend per share

     NA      $ 0.05      $ 0.03      $ 0.11      $ 0.10   

ASSET QUALITY

          

Allowance for loan losses (ALL)

   $ 15,724      $ 15,637      $ 15,722      $ 15,675      $ 15,394   

Non performing loans (NPLs) net of government guarantees

   $ 2,635      $ 1,989      $ 2,932      $ 4,606      $ 4,539   

Non performing assets (NPAs) net of government guarantees

   $ 16,802      $ 15,363      $ 16,109      $ 16,137      $ 16,070   

Net loan (recoveries) charge offs

   $ (87   $ 85      $ (47   $ (281   $ 523   

ALL as a percentage of gross loans

     1.25     1.50     1.52     1.52     1.51

ALL as a % NPLs, net of government guarantees

     596.74     786.17     536.22     340.32     339.15

Net loan charge offs (recoveries) to average loans

     -0.03     0.03     -0.02     -0.11     0.21

Net NPLs as a percentage of total loans

     0.21     0.19     0.28     0.45     0.44

Nonperforming assets as a percentage of total assets

     0.94     1.02     1.08     1.08     1.09

Consolidated classified asset ratio(4)

     27.60     24.54     24.27     24.72     26.82

Past due as a percentage of total loans (5)

     0.35     0.15     0.16     0.08     0.20

END OF PERIOD BALANCES

          

Total securities and short term deposits

   $ 391,988      $ 356,804      $ 353,893      $ 359,869      $ 345,121   

Total loans net of allowance

   $ 1,238,982      $ 1,029,384      $ 1,019,127      $ 1,014,346      $ 1,004,751   

Total earning assets

   $ 1,630,970      $ 1,386,188      $ 1,373,020      $ 1,374,215      $ 1,349,872   

Total assets

   $ 1,780,849      $ 1,504,325      $ 1,489,719      $ 1,498,763      $ 1,471,591   

Total non-interest bearing deposits

   $ 503,735      $ 407,311      $ 390,790      $ 397,942      $ 340,464   

Core deposits (6)

   $ 1,417,397      $ 1,110,861      $ 1,047,211      $ 1,026,542      $ 990,933   

Total deposits

   $ 1,496,747      $ 1,209,093      $ 1,145,235      $ 1,132,654      $ 1,097,355   

AVERAGE BALANCES

          

Total securities and short term deposits

   $ 371,061      $ 356,389      $ 351,695      $ 348,985      $ 350,774   

Total loans net of allowance

   $ 1,077,706      $ 1,013,049      $ 1,023,266      $ 1,011,391      $ 992,655   

Total earning assets

   $ 1,448,767      $ 1,369,438      $ 1,374,961      $ 1,360,376      $ 1,343,429   

Total assets

   $ 1,573,767      $ 1,484,542      $ 1,488,747      $ 1,473,470      $ 1,461,095   

Total non-interest bearing deposits

   $ 439,780      $ 404,569      $ 391,738      $ 362,204      $ 345,369   

Core deposits (6)

   $ 1,200,618      $ 1,082,950      $ 1,037,336      $ 1,010,734      $ 992,482   

Total deposits

   $ 1,283,604      $ 1,176,938      $ 1,141,897      $ 1,115,963      $ 1,093,904   

 

(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.


CAPITAL PACIFIC BANCORP (1)

Opening balance sheet

(In thousands)

(Unaudited)

 

     March 6,
2015
 

ASSETS

  

Securities available-for-sale

   $ 26,010   

Loan unpaid principal balances

     208,782   

Fair Value adjustments:

  

Credit quality-related

     (3,316

Interest rate-related

     (2,060
  

 

 

 

Net loans

  203,406   

Interest receivable

  547   

Federal Home Loan Bank stock

  627   

Property and equipment

  229   

Goodwill

  16,151   

Core deposit intangible

  3,721   

Deferred tax asset

  1,406   

Taxes receivable

  656   

Other real estate owned

  845   

Bank-owned life insurance

  5,683   

Other asset

  201   
  

 

 

 

Total assets

$ 259,482   
  

 

 

 

LIABILITIES AND SHAREHOLDERS EQUITY

Cash and due from banks, net of consideration paid

$ 3,249   

Deposits

  227,967   

Other liabilities

  4,688   
  

 

 

 

Total liabilities

  235,904   

Common stock

  23,578   
  

 

 

 

Total liabilities and shareholders’ equity

$ 259,482   
  

 

 

 

 

(1) On March 6, 2015 Pacific Continental Bank acquired Capital Pacific Bancorp and its wholly owned subsidiary, Capital Pacific Bank. This table represents the opening asset and liability balances.