PMBC Reports Net Income of $1.4 Million in the First Quarter of 2012 (5/07/12)
The Company's Fifth Consecutive Profitable Quarter
COSTA MESA, Calif., May 7, 2012 (GLOBE NEWSWIRE) -- Pacific Mercantile Bancorp (Nasdaq:PMBC) today reported net income of $1.4 million and $0.09 per diluted share of common stock in the quarter ended March 31, 2012, the fifth consecutive quarter of profits.
Raymond E. Dellerba, the Company's President and CEO, stated, "We are very pleased to be able to report our 5th consecutive profitable quarter. The Bank and our dedicated officers and employees will continue to do our part to support the small to medium size businesses in our California marketplace. The customers we bank provide the backbone of the well-being and growth of the economy." President Dellerba went on to say, "With the lending expertise and the cash management programs we have in place, we are able to give our business customers the tools to aid in the expansion of their businesses and, therefore, enable them to again hire new employees for the economic good of California."
"Furthermore, I really want to applaud the opportunities provided the Bank by our commercial lending and cash management, mortgage lending, and entertainment financing divisions, and our Preferred Lender status, customized SBA lending, including the Export-Import division, to support a world-wide influence that will benefit California well into the future. With the completion last month of the final installment of our $50.2 million capital raise, we have the capacity to promote these financial initiatives and programs," continued Mr. Dellerba. "But nothing can be accomplished without people, and again I want to thank our professional and dedicated officers and employees, our board of directors, and our customers and shareholders, for their unwavering support," concluded President Dellerba.
Results of Operations
In the three months ended March 31, 2012, the Company generated $2.2 million of pretax income, an increase of $525,000, or 31%, over pretax income of $1.7 million for the same three months of in the same quarter of 2011. That increase was primarily attributable to a $4.7 million, or 344%, increase in noninterest income, as compared to noninterest income in the first three months of 2011. That increase was due primarily to the growth of our mortgage banking business which generated a $3.7 million, or 440%, increase in revenue in this year's first quarter as compared to the first quarter of 2011.
Net income in the three months ended March 31, 2012 total $1.4 million, which was $298,000, or nearly 18%, lower than in the same three months of 2011. That decline was due to an $823,000 increase in the provision for income taxes, which was somewhat offset by the increase in pretax income of $525,000, in this year's first quarter.
Net income per diluted share of common stock declined to $0.09 in the first three months of 2012, from $0.13 per diluted share of common stock in the same three months of 2011. That decline was due not only to the decrease in net income, but also to a nearly 19% increase in the weighted average number of common shares outstanding during this year's first quarter, as compared to the first quarter of 2011. That increase was primarily the result of our issuance, in July 2011, of approximately 1.6 million shares of common stock on the conversion of $11,555,000 of our Series A Preferred Stock at a conversion price of $7.65 per share of common stock.
Net Interest Income. Net interest income in the three months ended March 31, 2012 decreased by $591,000, or nearly 7%, to $8.0 million from $8.6 million in the same three months of 2011, due primarily to a $1.2 million, or 10%, decrease in interest income, partially offset by a $560,000, or nearly 20%, decrease in interest expense. The reduction in interest income was primarily the result of a decrease in yields on loans and other interest-earning assets due primarily to further reductions in interest rates by the Federal Reserve Board and a resulting $37 million reduction in the average volume of, securities available for sale during this year's first quarter.
Provision for Loan Losses. During the first quarter end March 31, 2012, we reversed the provision for loan losses by $400,000, as a result of a determination, based on the methodologies we employ in assessing the sufficiency of the allowance for loan losses, or "ALL", that we could reduce the ALL by that due primarily to an overall improvement in the quality of the loans in our loan portfolio over the prior 12 months. As result, the ALL totaled $13.6 million and 1.98% of total loans outstanding at March 31, 2012. By comparison, the ALL totaled $18.4 million and 2.56% of total loans outstanding at March 31, 2011.
Noninterest income. Noninterest income increased by $4.7 million, or 344%, in this year's first quarter, primarily attributable to a $3.7 million, or 440%, increase in mortgage banking revenue (inclusive of gains on sales of mortgage loans), as a result of the growth of our mortgage banking business. Also contributing to the increase in noninterest income was $1.2 million of net gains on sales of securities available for sale.
Non-interest expense. In the three months ended March 31, 2012, noninterest expense increased by $4.0 million, or 47.7%, as compared to the corresponding period of 2011. That increase was due primarily to (i) the growth of our mortgage banking business, as we added mortgage personnel and incurred higher marketing, business development and other costs to increase the volume of mortgage loan originations and (ii) $1.7 million of write downs of the carrying values of other real estate owned ("OREO") to fair value.
Income tax expense. In the three months ended March 31, 2012, we recorded income tax expense of $823,000, which represents an effective combined federal and tax income tax rate of 37%. By comparison, notwithstanding the nearly $1.7 million in pretax income that we generated in the first quarter of 2011, we did not record any provision for income taxes for that quarter, because we were able to reduce a portion of the valuation allowance we had established in prior years against our deferred tax asset, which had the effect of offsetting the provision for income taxes we would otherwise have had to record. http://globenewswire.com/newsroom/news.html?d=254876