Attached files
| file | filename |
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| EX-99.2 - EXHIBIT 99.2 - PACIFIC MERCANTILE BANCORP | pmbcinvestordeckpressrelea.htm |
| 8-K - 8-K - PACIFIC MERCANTILE BANCORP | pmbcjan2017investorpresent.htm |
INVESTOR PRESENTAT ION
F E B R U A R Y 2 0 1 7
1
This presentation contains statements regarding our expectations, beliefs and views about our future financial performance and our business, trends
and expectations regarding the markets in which we operate, and our future plans. Those statements constitute “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, can be
identified by the fact that they do not relate strictly to historical or current facts. Often, they include words such as “believe,” “expect,” “anticipate,”
“intend,” “plan,” “estimate,” “project,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may”.
Forward-looking statements are based on current information available to us and our assumptions about future events over which we do not have
control. Moreover, our business and our markets are subject to a number of risks and uncertainties which could cause our actual financial
performance in the future, and the future performance of our markets (which can affect both our financial performance and the market prices of our
shares), to differ, possibly materially, from our expectations as set forth in the forward-looking statements contained in this presentation. In addition to
the risk of incurring loan losses, which is an inherent risk of the banking business, these risks and uncertainties include, but are not limited to, the
following: the risk that the economic recovery in the United States, which is still relatively fragile, will be adversely affected by domestic or international
economic conditions, which could cause us to incur additional loan losses and adversely affect our results of operations in the future; the risk that our
results of operations in the future will continue to be adversely affected by our exit from the wholesale residential mortgage lending business and the
risk that our commercial banking business will not generate the additional revenues needed to fully offset the decline in our mortgage banking
revenues within the next two to three years; the risk that our interest margins and, therefore, our net interest income will be adversely affected by
changes in prevailing interest rates; the risk that we will not succeed in further reducing our remaining nonperforming assets, in which event we would
face the prospect of further loan charge-offs and write-downs of other real estate owned and would continue to incur expenses associated with the
management and disposition of those assets; the risk that we will not be able to manage our interest rate risks effectively, in which event our operating
results could be harmed; the prospect that government regulation of banking and other financial services organizations will increase, causing our costs
of doing business to increase and restricting our ability to take advantage of business and growth opportunities. Additional information regarding these
and other risks and uncertainties to which our business is subject are contained in our Annual Report on Form 10-K for the year ended December 31,
2015 which is on file with the SEC as well as subsequent Quarterly Reports on Form 10-Q that we file with the SEC. Due to these and other risks and
uncertainties to which our business is subject, you are cautioned not to place undue reliance on the forward-looking statements contained in this news
release, which speak only as of its date, or to make predictions about our future financial performance based solely on our historical financial
performance. We disclaim any obligation to update or revise any of the forward-looking statements as a result of new information, future events or
otherwise, except as may be required by law.
FORWARD LOOKING STATEMENTS
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CORPORATE OVERVIEW
_________________________________
PACIFIC MERCANTILE BANK IS A
FULL SERVICE BUSINESS BANK
SERVING SOUTHERN CALIFORNIA
Bank founded in 1999
$1.1 billion in total assets
9 offices in Southern California
Focused on serving small- and
middle-market businesses
32% owned by Carpenter
Community BancFund
CORPORATE HEADQUARTERS
COSTA MESA, CALIFORNIA
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OFFICE LOCATIONS
_________________________________
ONTARIO
BEVERLY HILLS
LA HABRA
COSTA MESA
IRVINE SPECTRUM
NEWPORT BEACH
SAN DIEGO
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MARKET POSITIONING
_________________________________
“We Help Companies Succeed”
Differentiating Strategy to Target Business Clients
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Small- to Medium-
Sized Businesses
•Need for financial
guidance
• Limited internal
financial sophistication
• Limited outside
advisory support
Horizon
Analytics
• Financial analysis
•Business planning
•Modeling and
forecasting
•Balance sheet
management
Service/Products
•Customized Commercial
Loans
•Asset Based Lending
•Owner Occupied RE
•Treasury Management
•Value driven pricing
LOAN PORTFOLIO
FOCUS ON RELATIONSHIP LENDING
_________________________________
CRE: all
other, 18.3%
CRE: owner-
occupied,
22.7%
Commercial,
35.2%
Multifamily,
[VALUE]
SFR,
[VALUE]
[CATEGORY
NAME]
[VALUE]
$ 947 Million as of
December 31, 2016
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CRE: all
other, 20.6%
CRE: owner-
occupied,
22.7%
Commercial,
23.4%
Multifamily,
[VALUE]
SFR,
[VALUE]
Other,
7.0%
$ 731 Million as of
December 31, 2012
46.1% Relationship Loans
57.9% Relationship Loans
Increasing Loan Production
_________________________________
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$51.4
$66.5
$137.7
$124.3
$167.0
68.6%
64.3%
63.1%
55.9% 58.1%
40%
45%
50%
55%
60%
65%
70%
75%
80%
$0.0
$50.0
$100.0
$150.0
$200.0
4Q15 1Q16 2Q16 3Q16 4Q16
New Loan Commitments
($ in millions)
Branch repositioning strategy
has put more of the staff in
business development roles
Better sales execution and
leveraging the competitive
advantages of Horizon Analytics
Improved coordination and
collaboration between
relationship managers and
credit administration
Increasing loan production
partially offset by declining
utilization rates
C&I Line Utilization
Asset Quality
_________________________________
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$32.9
$38.8
$29.7
$68.5
$53.9
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
12/31/15 3/31/16 6/30/16 9/30/16 12/31/16
Classified Assets
Complete overhaul of credit administration in
the first half of 2016
New CCO implemented improved loan
monitoring and underwriting standards
Comprehensive credit review resulted in
significant credit downgrades
Classified assets declined 21% in 4Q16,
primarily due to payoffs
Further credit improvement expected in 1H17
as other classified loans are paid off or
upgraded
DEPOSIT COMPOSITION
FOCUSED ON CORE DEPOSITS
_________________________________
$1.00 Billion as of December 31, 2016
Continuing to attract non-interest bearing deposits
Shifted balances out of CDs into savings and money market accounts
Savings and money market balances tend to be stickier and less price sensitive than CDs
Non-interest
bearing
33%
Interest
checking
7%
Savings/Money
Market
34%
Certificates of
Deposit
26%
Core Deposits as a Percentage of Total Deposits
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43.1%
51.5%
60.6%
68.6%
74.2%
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
70.0%
75.0%
80.0%
12/31/12 12/31/13 12/31/14 12/31/15 12/31/16
STRONG CAPITAL POSITION
_________________________________
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
TOTAL CAPITAL RATIO TIER 1 CAPITAL RATIO COMMON EQUITY TIER 1
CAPITAL RATIO
12.8%
11.5%
9.9% 10.0%
8.0%
6.5%
PMBC WELL-CAPITALIZED REQUIREMENT
10
As of December 31, 2016
OUTLOOK
_________________________________
Strong loan growth in 2017 and beyond
Growing business banking relationships
Increasing focus on larger operating companies ($5-$10 million credits)
Stable to increasing net interest margin
Well positioned to benefit from rising interest rates
Higher non-interest income
New business clients using more treasury management products
Relatively stable expense levels
Investment in infrastructure offset by a decline in professional fees
Improving credit quality with manageable credit costs
Continue moving lower quality credits out of the bank
Leading to steady increase in profitability
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I n v e s t o r R e l a t i o n s :
C u r t C h r i s t i a n s s e n
( 7 1 4 ) 4 3 8 - 2 5 3 1
C u r t . c h r i s t i a n s s e n @ p m b a n k . c o m
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