Pacific Commerce Bancorp fka PCBC

[56Chevy]

Pacific Commerce Bank Reports Strong First Quarter Growth and Profitability

Company Release - 04/24/2014 06:15

LOS ANGELES, CA -- (Marketwired) -- 04/24/14 -- Pacific Commerce Bank (OTCQB: PFCI) today reported financial results for the first quarter of 2014 that reflected net income after tax of $891,000 along with another solid quarter of loan growth. This compares favorably to net income of $235,000 in the first quarter of 2013. Loans outstanding grew $12.2 million, or 8.4% in the first quarter and have increased $28.7 million, or 22.2% since the first quarter of 2013.

CEO Scott R. Andrews commented, "The first quarter of 2014 was very productive with $22.6 million in new loan originations. Business development efforts have continued to result in significant new customer acquisitions in both the greater Los Angeles and San Diego County markets. Efforts to bolster core deposit growth include the hiring of a deposit-focused Relationship Officer for the Bank's West Los Angeles market. The establishment of our new full-service branch office in San Diego County will also increase core deposit growth opportunities in that market."

Andrews further commented, "Future earnings growth will be supplemented by an active SBA 7(a) lending program, with additional SBA business development resources being deployed in the second quarter focusing on the Los Angeles market. Pacific Commerce Bank is well positioned to continue the robust organic growth experienced over the past year, and with our asset quality issues fully behind us, the focus and attention of management is to increase revenues while continuing to control expenses."

Chairman Thomas Iino commented, "Results for the first quarter of 2014 put Pacific Commerce Bank on track for a solid year of balance sheet growth and improved core earnings. The Board of Directors continues to focus on providing meaningful shareholder returns over the long-term, and with pursuing in-market opportunities for strategic mergers and acquisitions in 2014."

FINANCIAL RESULTS

Net income for the first quarter of 2014 was supplemented by a reversal of $1.5 million in loan loss provision, due to the significant improvement in asset quality of the Bank. Net interest income increased $109,000, or 7.2% from the prior quarter as a result of the strong loan growth experienced in the first quarter, and the continuing reduction in cost of funds. Non-interest expense declined $382,000, or 17.4% from the prior quarter, which included extraordinary, one-time expenses related to the sale of a large OREO property in November. Investments in new technologies in the fourth quarter and the hiring of additional business development personnel in the first quarter of 2014 drove other non-interest expenses higher than the prior period. Non-interest income declined quarter-over-quarter due to the aforementioned OREO sale. Revenue from the sale of SBA loans in the first quarter was below prior quarter levels, which was the result of a management decision to defer eligible loans for sale into the second quarter.

Net interest margin for the first quarter was 3.95%, an improvement from the 3.83% reported for the prior quarter. This was the result of a higher yield on earning assets of 4.20% versus 4.10% and a lower cost of funds of 0.28% versus 0.30%. Mirroring the industry trend of shrinking margins, on a year-over-year basis the NIM declined from 4.12% a year ago, although the Bank's cost of funds declined from 0.37% to 0.28%, a 24% reduction.

Total asset growth was $13.9 million, or 8.0% for the first quarter, and $27.6 million, or 17.3% growth from a year ago. Asset growth was centered in loans outstanding, as previously mentioned, totaling $12.2 million for the quarter, and $28.7 million from the prior year. The Bank sold its one remaining OREO property at a small gain on sale in the first quarter, for a reduction of $2.6 million in OREO versus the prior year.

As of March 31, 2014, total deposits were up $8.4 million from the same time last year, with core deposits increasing $15.2 million or 20%. Time deposits, predominantly from institutional depositors, declined $6.8 million as the Bank concentrated on attracting core deposits and reducing its funding costs. On a monthly average basis, first quarter deposits increased $3.1 million, or 2.1% and monthly average core deposits increased $15.9 million, or 21% year-over-year. To supplement on-balance sheet liquidity, FHLB borrowings were utilized in the first quarter, with outstanding short-term advances totaling $13.5 million at quarter-end.

Asset quality remains stable, with only three non-accrual loans totaling $477,000 as of quarter-end. The Bank has no OREO properties and has an NPA ratio of 0.25% versus 2.43% one year ago and 0.29% at the prior quarter.

During the first quarter of 2014, Pacific Commerce Bank exited the United States Treasury Department's Capital Purchase Program (TARP) via the Treasury's auction process. The Bank's preferred shares were purchased by three unaffiliated parties, who continue to hold the non-cumulative, perpetual preferred shares. No preferred dividends were paid in February, and none are planned for the future, as the Bank looks to retain its Tier 1 equity for on-going growth initiatives.

Pacific Commerce Bank is well capitalized and poised for future growth opportunities. The Bank's regulatory capital ratios are as follows:

----------------------------------------3/31/2014
Tier 1 Leverage Ratio:............... 14.20%
Tier 1 Risk-Based Capital Ratio:..15.59%
Total Risk-Based Capital Ratio:...16.85%

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http://www.snl.com/IRWebLinkX/file.aspx?IID=4073179&FID=23334100

*O/S is 4,461,255...Total Stockholders' Equity $27.1MM.....BV $6.07...good target bank to be acquired.

**3 years ago accredited investors paid $5 @ share.

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Pacific Commerce Ban (PFCI)
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