Pacific Continental Corporation Reports Third Quarter 2015 Results

EUGENE, Ore., Oct. 14, 2015 /PRNewswire/ -- Pacific Continental Corporation (Nasdaq: PCBK), the holding company of Pacific Continental Bank, today reported financial results for the third quarter 2015.

Recent highlights:

  • Achieved quarterly loan growth of $50.9 million.
  • Achieved quarterly net income of $5.3 million, or $0.27 per diluted share.
  • Achieved quarterly core deposit growth of $20.3 million.
  • Achieved a return on average assets of 1.14%.
  • Declared fourth quarter 2015 regular quarterly cash dividend of $0.11 per share.
  • Efficiency ratio improved further to 55.12%.
  • Recognized by Bank Director Magazine in their 2015 Performance scorecard as the 37th ranked bank in the nation of the 425 banks with assets between $1 billion and $5 billion as per the June 30, 2015 UBPR.

Net income
Net income for third quarter 2015 was $5.3 million or $0.27 per diluted share compared to net income of $4.4 million or $0.25 per diluted share in third quarter 2014. Return on average assets, average equity and average tangible equity for third quarter 2015 were 1.14%, 9.91%, and 12.42%, respectively, compared to 1.18%, 9.69%, and 11.13% for third quarter 2014. In addition, the Company's efficiency ratio improved to 55.12% for third quarter 2015 compared to 57.04% for the same quarter last year.

"We are very pleased with our second consecutive quarter of record earnings and quality loan growth, all fostered by a talented and strategically focused team of community bankers," said Roger Busse, chief executive officer. "Our commitment to quality growth within our well-defined strategic business niche segments, along with the successful integration and expansion of the Capital Pacific client base, have provided us with solid core growth in earning assets."

Loans
Growth in outstanding loans during the third quarter 2015 was a record $50.9 million, the single highest quarterly growth, not including acquisitions. Outstanding gross loans at September 30, 2015, were $1.36 billion. Organic loan growth during the third quarter 2015 was primarily attributable to increased commercial and industrial lending, funding of construction loans, and local real estate lending. Loan growth during the quarter occurred in all three of the Company's primary markets. Loans to dental professionals were up $19.2 million from the previous quarter. At September 30, 2015, loans to dental practitioners totaled $340.3 million and represented 25.08% of the loan portfolio.

"Our loan growth during the past two quarters has been substantial, and we are very pleased to set another record for production this quarter," said Casey Hogan, chief operating officer. "Our pipeline remains solid as our bankers continue to work hard to develop new relationships and expand existing relationships and we expect strong growth in both loans and deposits as we close out 2015."

Core deposits
Period-end Company-defined core deposits at September 30, 2015, were $1.47 billion. Outstanding core deposits were up $20.3 million during the third quarter 2015. Average core deposits, which removes daily volatility in balances, were $1.48 billion for third quarter 2015 compared to $1.41 billion and $1.04 billion for second quarter 2015 and third quarter 2014, respectively. The increase in average core deposits on a linked-quarter and year-over-year basis was due to both organic growth and the March 2015 acquisition of Capital Pacific Bank. At period-end September 30, 2015, noninterest-bearing demand deposits totaled $544.0 million and represented 37.12% of core deposits.

Credit quality and statistics
During the third quarter, the Company made a $625 thousand provision for loan losses, compared to $550 thousand in second quarter 2015. The third quarter 2015 provision for loan losses was related to the loan growth experienced during the quarter, as credit quality statistics remained strong. With the acquisition of the Capital Pacific loan portfolio, the allowance for loan losses as a percentage of outstanding loans at September 30, 2015, declined to 1.23%, compared to 1.50% at December 31, 2014. This was a result of recording the Capital Pacific Bank acquired loans at their fair value, which included all credit risk adjustments. At September 30, 2015, the allowance for loan losses as a percentage of nonperforming loans, net of government guarantees, remained strong at 744.60%. During the third quarter 2015, the Company recorded net loan charge-offs of $26 thousand. For the first nine months of 2015, the Company recorded $200 thousand in net loan charge-offs.

At September 30, 2015, nonperforming assets, net of government guarantees, totaled $14.1 million, or 0.75% of total assets, compared to $14.9 million, or 0.82% of total assets, and $15.4 million, or 1.02% of total assets, at June 30, 2015 and December 31, 2014, respectively. During the third quarter 2015, resolutions of nonperforming loans and sales of other real estate owned continued. Nonperforming assets at September 30, 2015, were comprised of $2.2 million of nonperforming loans, net of government guarantees, and $11.9 million in other real estate owned. Loans past-due 30-89 days were 0.14% of total loans at September 30, 2015, compared to 0.19% of total loans at June 30, 2015 and 0.16% of total loans at September 30, 2014.

Net interest margin
The third quarter 2015 net interest margin averaged 4.32%, a decrease of 7 basis points over the second quarter 2015 net interest margin, and a 3 basis point improvement over the third quarter 2014 net interest margin. The decrease in the linked-quarter net interest margin was primarily due to accretion of acquired loan fair value marks. The net accretion added 13 basis points to our margin for the third quarter 2015, compared to 16 basis points for the second quarter 2015. During the third quarter 2015, the net accretion of loan fair value marks was $616 thousand, compared to $635 thousand for second quarter 2015. Accretion of fair value marks related to both the Capital Pacific Bank acquisition completed in March 2015 and the Century Bank acquisition completed in February 2013.

Noninterest income and expense
Third quarter 2015 noninterest income was $1.7 million, up $87 thousand from second quarter 2015, and up $517 thousand from third quarter 2014. The increase in linked-quarter noninterest income was primarily due to an increase in service and other account related charges, along with an increase in bankcard revenue. The year-over-year increase in noninterest income was due to increases in account and other service charges resulting from a combination of the Capital Pacific acquisition and organic growth and an increase in gain on sale of investment securities.

Noninterest expense in third quarter 2015 was $11.2 million, an increase of $152 thousand from second quarter 2015, primarily due to the $122 thousand in OREO related expenses. We recorded OREO income of $60 thousand for the second quarter 2015.

Capital levels
The Company's consolidated capital ratios continued to be above the minimum thresholds for the FDIC's "well-capitalized" designation. At September 30, 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 9.88%, 11.00%, 11.49%, and 12.58%, respectively. This is after the application of the Basel III regulatory capital framework. The FDIC's minimum thresholds for a "well-capitalized" designation 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, funding sources and revenue trends. 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 total shareholders' equity (GAAP) to ending tangible shareholders' equity (non-GAAP), and total assets (GAAP) to total tangible assets (non-GAAP)



September 30,


June 30,


September 30,



2015


2015


2014



(In thousands)








Total shareholders' equity

$ 216,676


$ 212,015


$ 182,538

Subtract:







Goodwill

39,074


39,074


22,881


Core deposit intangible assets

4,028


4,151


644

Tangible shareholders' equity (non-GAAP)

$ 173,574


$ 168,790


$ 159,013








Total assets

$ 1,878,283


$ 1,830,942


$ 1,489,719

Subtract:







Goodwill

39,074


39,074


22,881


Core deposit intangible assets

4,028


4,151


644

Total tangible assets (non-GAAP)

$ 1,835,181


$ 1,787,717


$ 1,466,194

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 third quarter 2015 on Thursday, October 15, 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 approximately $1.9 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 or deposit 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 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 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 Private Securities Litigation Reform Act (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



September 30,


June 30,


September 30,


Quarter


Year



2015


2015


2014


% Change


% Change

Interest and dividend income











Loans


$ 17,240


$ 16,594


$ 13,703


3.89%


25.81%

Taxable securities


1,713


1,736


1,547


-1.32%


10.73%

Tax-exempt securities


490


499


500


-1.80%


-2.00%

Federal funds sold & interest-bearing deposits with banks


7


11


3


-36.36%


133.33%



19,450


18,840


15,753


3.24%


23.47%












Interest expense











Deposits


854


845


843


1.07%


1.30%

Federal Home Loan Bank & Federal Reserve borrowings


227


239


278


-5.02%


-18.35%

Junior subordinated debentures


57


56


57


1.79%


0.00%

Federal funds purchased


4


4


3


0.00%


33.33%



1,142


1,144


1,181


-0.17%


-3.30%












Net interest income


18,308


17,696


14,572


3.46%


25.64%












Provision for loan losses


625


550


-


13.64%


NA

Net interest income after provision for loan losses


17,683


17,146


14,572


3.13%


21.35%












Noninterest income











Service charges on deposit accounts


703


661


524


6.35%


34.16%

Bankcard income


276


214


211


28.97%


30.81%

Bank-owned life insurance income


156


170


118


-8.24%


32.20%

Gain on sale of investment securities


143


139


3


2.88%


4666.67%

Impairment losses on investment securities (OTTI)


-


(13)


-


-100.00%


NA

Other noninterest income


436


456


341


-4.39%


27.86%



1,714


1,627


1,197


5.35%


43.19%












Noninterest expense











Salaries and employee benefits


6,822


6,992


5,939


-2.43%


14.87%

Premises and equipment


1,148


1,094


958


4.94%


19.83%

Data processing


838


821


657


2.07%


27.55%

Legal and professional fees


496


491


148


1.02%


235.14%

Business development


369


411


344


-10.22%


7.27%

FDIC insurance assessment


283


273


209


3.66%


35.41%

Other real estate expense (income)


122


(60)


100


-303.33%


22.00%

Other noninterest expense


1,104


1,008


794


9.52%


39.04%



11,182


11,030


9,149


1.38%


22.22%












Income before provision for income taxes


8,215


7,743


6,620


6.10%


24.09%

Provision for income taxes


2,890


2,648


2,189


9.14%


32.02%












Net income


$ 5,325


$ 5,095


$ 4,431


4.51%


20.18%












Earnings per share:











Basic


$ 0.27


$ 0.26


$ 0.25


3.85%


8.00%

Diluted


$ 0.27


$ 0.26


$ 0.25


3.85%


8.00%












Weighted average shares outstanding:











Basic


19,591,666


19,562,363


17,749,217
















Common stock equivalents











attributable to stock-based awards


225,104


226,521


221,241





Diluted


19,816,770


19,788,884


17,970,458
















PERFORMANCE RATIOS











Return on average assets


1.14%


1.14%


1.18%





Return on average equity (book)


9.91%


9.68%


9.69%





Return on average equity (tangible) (1)


12.42%


12.18%


11.13%





Net interest margin - fully tax-equivalent yield (2)


4.32%


4.39%


4.29%





Efficiency ratio (3)


55.12%


56.30%


57.04%







(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.

NA Not applicable

PACIFIC CONTINENTAL CORPORATION

Year-to-Date Consolidated Income Statements

(In thousands, except share and per share amounts)

(Unaudited)










Nine months ended


Year over



September 30,


September 30,


Year



2015


2014


% Change

Interest and dividend income







Loans


$ 48,020


$ 40,391


18.89%

Taxable securities


4,825


4,693


2.81%

Tax-exempt securities


1,491


1,471


1.36%

Federal funds sold & interest-bearing deposits with banks


23


7


228.57%



54,359


46,562


16.75%








Interest expense







Deposits


2,509


2,469


1.62%

Federal Home Loan Bank & Federal Reserve borrowings


694


838


-17.18%

Junior subordinated debentures


169


169


0.00%

Federal funds purchased


10


12


-16.67%



3,382


3,488


-3.04%








Net interest income


50,977


43,074


18.35%








Provision for loan losses


1,175


-


NA

Net interest income after provision for loan losses


49,802


43,074


15.62%








Noninterest income







Service charges on deposit accounts


1,939


1,582


22.57%

Bankcard income


687


657


4.57%

Bank-owned life insurance income


435


352


23.58%

Gain (loss) on sale of investment securities


336


(34)


-1088.24%

Impairment losses on investment securities (OTTI)


(13)


-


NA

Other noninterest income


1,234


1,119


10.28%



4,618


3,676


25.63%








Noninterest expense







Salaries and employee benefits


20,223


17,851


13.29%

Premises and equipment


3,221


2,825


14.02%

Data processing


2,343


2,019


16.05%

Legal and professional fees


1,386


889


55.91%

Business development


1,134


1,059


7.08%

FDIC insurance assessment


769


647


18.86%

Other real estate expense


303


338


-10.36%

Merger related expense (1)


1,836


-


NA

Other noninterest expense


2,971


2,302


29.06%



34,186


27,930


22.40%








Income before provision for income taxes


20,234


18,820


7.51%

Provision for income taxes


7,012


6,409


9.41%








Net income


$ 13,222


$ 12,411


6.53%








Earnings per share:







Basic


$ 0.69


$ 0.70


-1.43%

Diluted


$ 0.68


$ 0.69


-1.45%








Weighted average shares outstanding:







Basic


19,133,682


17,844,914










Common stock equivalents







attributable to stock-based awards


224,308


229,687



Diluted


19,357,990


18,074,601










PERFORMANCE RATIOS







Return on average assets


1.01%


1.13%



Return on average equity (book)


8.60%


9.16%



Return on average equity (tangible) (2)


10.62%


10.53%



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


4.34%


4.32%



Efficiency ratio (4)


60.62%


58.75%





(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.

NA Not applicable

PACIFIC CONTINENTAL CORPORATION

Consolidated Balance Sheets

(In thousands, except share amounts)

(Unaudited)









Linked

Year over



September 30,


June 30,


September 30,


Quarter

Year



2015


2015


2014


% Change

% Change

ASSETS










Cash and due from banks


$ 21,698


$ 29,812


$ 18,671


-27.22%

16.21%

Interest-bearing deposits with banks


11,293


9,790


5,841


15.35%

93.34%

Total cash and cash equivalents


32,991


39,602


24,512


-16.69%

34.59%











Securities available-for-sale


387,073


383,618


348,052


0.90%

11.21%

Loans, less allowance for loan losses and net deferred fees


1,339,195


1,288,919


1,019,127


3.90%

31.41%

Interest receivable


5,688


5,833


4,759


-2.49%

19.52%

Federal Home Loan Bank stock


6,768


5,468


10,125


23.77%

-33.16%

Property and equipment, net of accumulated depreciation


17,708


17,854


18,040


-0.82%

-1.84%

Goodwill and intangible assets


43,102


43,225


23,525


-0.28%

83.22%

Deferred tax asset


5,319


6,036


7,247


-11.88%

-26.60%

Taxes receivable


587


103


-


469.90%

NA

Other real estate owned


11,854


12,666


13,177


-6.41%

-10.04%

Bank-owned life insurance


22,727


22,571


16,488


0.69%

37.84%

Other assets


5,271


5,047


4,667


4.44%

12.94%











Total assets


$ 1,878,283


$ 1,830,942


$ 1,489,719


2.59%

26.08%











LIABILITIES AND SHAREHOLDERS' EQUITY










Deposits










Noninterest-bearing demand


$ 544,009


$ 531,697


$ 390,790


2.32%

39.21%

Savings and interest-bearing checking


831,933


825,858


598,776


0.74%

38.94%

Core time deposits


89,605


87,663


57,645


2.22%

55.44%

Total core deposits (2)


1,465,547


1,445,218


1,047,211


1.41%

39.95%











Non-core time deposits


59,407


68,963


98,024


-13.86%

-39.40%

Total deposits


1,524,954


1,514,181


1,145,235


0.71%

33.16%











Securities sold under agreements to repurchase


302


368


1,067


-17.93%

-71.70%

Federal funds and overnight funds purchased


5,000


5,500


670


-9.09%

646.27%

Federal Home Loan Bank borrowings


116,500


84,000


145,000


38.69%

-19.66%

Junior subordinated debentures


8,248


8,248


8,248


0.00%

0.00%

Accrued interest and other payables


6,603


6,630


6,961


-0.41%

-5.14%

Total liabilities


1,661,607


1,618,927


1,307,181


2.64%

27.11%











Shareholders' equity










Common stock: 50,000,000 shares authorized. Shares issued










and outstanding: 19,591,703 at September 30, 2015, 19,591,532










at June 30, 2015 and 17,716,776 at September 30, 2014


155,695


155,325


131,057


0.24%

18.80%

Retained earnings


56,320


53,150


48,011


5.96%

17.31%

Accumulated other comprehensive income


4,661


3,540


3,470


31.67%

34.32%



216,676


212,015


182,538


2.20%

18.70%











Total liabilities and shareholders' equity


$ 1,878,283


$ 1,830,942


$ 1,489,719


2.59%

26.08%





















CAPITAL RATIOS










Total capital (to risk weighted assets) (3)


12.58%


12.88%


15.69%




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


11.49%


11.78%


14.44%




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


11.00%


11.27%


NA




Tier I capital (to leverage assets) (3)


9.88%


10.01%


11.20%




Tangible common equity (to tangible assets)(1)


9.46%


9.44%


10.85%




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


11.08%


11.32%


14.04%














OTHER FINANCIAL DATA










Shares outstanding at end of period


19,591,703


19,591,532


17,716,776




Tangible shareholders' equity(1)


$ 173,574


$ 168,790


$ 159,013




Book value per share


$ 11.06


$ 10.82


$ 10.30




Tangible book value per share


$ 8.86


$ 8.62


$ 8.98






(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 2015 capital ratios have been compiled based on the new methodology. Capital ratios prior to 2015 have not been restated in conformity with the new methodology.

PACIFIC CONTINENTAL CORPORATION

Loans by Type

(In thousands)

(Unaudited)




















Linked


Year over



September 30,


June 30,


September 30,


Quarter


Year



2015


2015


2014


% Change


% Change

LOANS BY TYPE











Real estate secured loans:











Permanent loans:











Multi-family residential


$ 64,083


$ 68,289


$ 50,563


-6.16%


26.74%

Residential 1-4 family


58,313


57,112


44,610


2.10%


30.72%

Owner-occupied commercial


353,255


346,065


249,657


2.08%


41.50%

Nonowner-occupied commercial


288,539


275,077


180,648


4.89%


59.72%

Total permanent real estate loans


764,190


746,543


525,478


2.36%


45.43%

Construction loans:











Multi-family residential


9,340


6,590


19,178


41.73%


-51.30%

Residential 1-4 family


30,834


30,145


35,421


2.29%


-12.95%

Commercial real estate


39,259


31,659


32,946


24.01%


19.16%

Commercial bare land and acquisition & development


16,947


15,870


12,264


6.79%


38.18%

Residential bare land and acquisition & development


7,602


7,074


6,736


7.46%


12.86%

Total construction real estate loans


103,982


91,338


106,545


13.84%


-2.41%

Total real estate loans


868,172


837,881


632,023


3.62%


37.36%

Commercial loans


479,018


459,458


398,702


4.26%


20.14%

Consumer loans


3,575


3,783


3,348


-5.50%


6.78%

Other loans


6,280


5,025


1,802


24.98%


248.50%

Gross loans


1,357,045


1,306,147


1,035,875


3.90%


31.00%

Deferred loan origination fees


(1,238)


(1,215)


(1,026)


1.89%


20.66%



1,355,807


1,304,932


1,034,849


3.90%


31.01%

Allowance for loan losses


(16,612)


(16,013)


(15,722)


3.74%


5.66%



$ 1,339,195


$ 1,288,919


$ 1,019,127


3.90%


31.41%












SELECTED MARKET LOAN DATA











Eugene market gross loans, period-end


$ 368,666


$ 358,806


$ 361,599


2.75%


1.95%

Portland market gross loans, period-end


647,527


631,420


389,977


2.55%


66.04%

Seattle market gross loans, period-end


137,830


134,341


132,827


2.60%


3.77%

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


203,022


181,580


151,472


11.81%


34.03%

Total gross loans, period-end


$ 1,357,045


$ 1,306,147


$ 1,035,875


3.90%


31.00%












DENTAL LOAN DATA (2)











Local Dental gross loans, period-end


$ 155,137


$ 156,315


$ 164,271


-0.75%


-5.56%

National Dental gross loans, period-end


185,161


164,740


142,817


12.40%


29.65%

Total gross dental loans, period-end


$ 340,298


$ 321,055


$ 307,088


5.99%


10.81%












(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


Nine months ended



September 30,


June 30,


September 30,


September 30,


September 30,



2015


2015


2014


2015


2014

BALANCE SHEET AVERAGES











Loans, net of deferred fees


$ 1,335,897


$ 1,273,148


$ 1,038,970


$ 1,235,031


$ 1,024,935

Allowance for loan losses


(16,275)


(15,782)


(15,704)


(15,913)


(15,718)

Loans, net of allowance


1,319,622


1,257,366


1,023,266


1,219,118


1,009,217

Securities and short-term deposits


400,428


398,836


351,695


390,216


350,487

Earning assets


1,720,050


1,656,202


1,374,961


1,609,334


1,359,704

Noninterest-earning assets


139,368


144,325


113,786


136,283


114,835

Assets


$ 1,859,418


$ 1,800,527


$ 1,488,747


$ 1,745,617


$ 1,474,539












Interest-bearing core deposits(1)


$ 944,216


$ 901,577


$ 645,598


$ 869,548


$ 647,075

Noninterest-bearing core deposits(1)


538,768


508,259


391,738


495,965


366,607

Core deposits(1)


1,482,984


1,409,836


1,037,336


1,365,513


1,013,682

Noncore interest-bearing deposits


62,481


73,469


104,561


72,903


103,749

Deposits


1,545,465


1,483,305


1,141,897


1,438,416


1,117,431

Borrowings


93,211


100,747


158,418


95,011


170,311

Other noninterest-bearing liabilities


7,512


5,466


6,975


6,586


5,605

Liabilities


1,646,188


1,589,518


1,307,290


1,540,013


1,293,347

Shareholders' equity (book)


213,230


211,009


181,457


205,604


181,192

Liabilities and equity


$ 1,859,418


$ 1,800,527


$ 1,488,747


$ 1,745,617


$ 1,474,539












Shareholders' equity (tangible)(2)


$ 170,062


$ 167,757


$ 157,916


$ 166,387


$ 157,621












Period-end earning assets


$ 1,737,561


$ 1,682,327


$ 1,373,020
















SELECTED MARKET DEPOSIT DATA











Eugene market core deposits, period-end(1)


$ 747,298


$ 759,079


$ 642,220





Portland market core deposits, period-end(1)


549,113


521,317


256,732





Seattle market core deposits, period-end(1)


169,136


164,822


148,259





Total core deposits, period-end(1)


1,465,547


1,445,218


1,047,211





Other deposits, period-end


59,407


68,963


98,024





Total


$ 1,524,954


$ 1,514,181


$ 1,145,235
















Eugene market core deposits, average(1)


$ 776,755


$ 742,252


$ 634,412





Portland market core deposits, average(1)


537,911


508,547


250,029





Seattle market core deposits, average(1)


168,318


159,037


152,895





Total core deposits, average(1)


1,482,984


1,409,836


1,037,336





Other deposits, average


62,481


73,469


104,561





Total


$ 1,545,465


$ 1,483,305


$ 1,141,897
















NET INTEREST MARGIN RECONCILIATION











Yield on average loans (3)


5.24%


5.34%


5.31%


5.31%


5.35%

Yield on average securities(4)


2.52%


2.61%


2.61%


2.52%


2.65%

Yield on average earning assets(4)


4.59%


4.67%


4.62%


4.62%


4.66%












Rate on average interest-bearing core deposits


0.25%


0.27%


0.28%


0.27%


0.29%

Rate on average interest-bearing non-core deposits


1.58%


1.33%


1.48%


1.43%


1.37%

Rate on average interest-bearing deposits


0.34%


0.35%


0.45%


0.36%


0.44%












Rate on average borrowings


1.23%


1.19%


0.85%


1.23%


0.80%

Cost of interest-bearing funds


0.41%


0.43%


0.52%


0.44%


0.51%












Interest rate spread(4)


4.17%


4.24%


4.11%


4.18%


4.15%












Net interest margin- fully tax equivalent yield(4)


4.32%


4.39%


4.28%


4.34%


4.32%












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


0.13%


0.16%


0.03%


0.14%


0.05%



(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 $152, $180 and $157 for the three months ended September 30, 2015, June 30, 2015 and September 30, 2014, respectively, and $478 and $424 for the nine months ended September 30, 2015 and 2014, respectively.

(4)

Tax-exempt income has been adjusted to a tax-equivalent basis at a 35% tax rate. The tax equivalent yield adjustment to interest earned on loans was $173, $168 and $32 for the three months ended September 30, 2015, June 30, 2015, and September 30, 2014 , respectively, and $415 and $93 for the nine months ended September 30, 2015 and 2014, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $264, $268 and $269 for the three months ended September 30, 2015, June 30, 2015 and September 30, 2014, respectively, and $803 and $792 for the nine months ended September 30, 2015 and 2014, respectively.

(5)

During the three months ended September 30, 2015, June 30, 2015 and September 30, 2014, accretion of the fair value adjustment on acquired loans contributed to interest income $616, $635, and $95, respectively, and $1,620 and $436 for the nine months ended September 30, 2015 and 2014, respectively.

PACIFIC CONTINENTAL CORPORATION

Nonperforming Assets, Asset Quality Ratios and Allowance for Loan Losses

(Dollars in thousands, except per share data)

(Unaudited)

















September 30,


June 30,


September 30,









2015


2015


2014







NONPERFORMING ASSETS












Non-accrual loans













Real estate secured loans:













Permanent loans:













Multi-family residential


$ -


$ -


$ -







Residential 1-4 family


569


688


459







Owner-occupied commercial


2,371


1,117


787







Nonowner-occupied commercial


829


878


1,245







Total permanent real estate loans


3,769


2,683


2,491







Construction loans:













Multi-family residential


-


-


-







Residential 1-4 family


53


-


-







Commercial real estate


-


-


-







Commercial bare land and acquisition & development


-


-


-







Residential bare land and acquisition & development


-


-


-







Total construction real estate loans


53


-


-







Total real estate loans


3,822


2,683


2,491







Commercial loans


983


955


762







Total nonaccrual loans


4,805


3,638


3,253






90-days past due and accruing interest


-


-


-







Total nonperforming loans


4,805


3,638


3,253







Nonperforming loans guaranteed by government


(2,574)


(1,380)


(321)







Net nonperforming loans


2,231


2,258


2,932






Other real estate owned


11,854


12,666


13,177







Total nonperforming assets, net of guaranteed loans


$ 14,085


$ 14,924


$ 16,109



















ASSET QUALITY RATIOS













Allowance for loan losses as a percentage of total loans

outstanding


1.23%


1.23%


1.52%







Allowance for loan losses as a percentage of total

nonperforming loans, net of government guarantees


744.60%


709.17%


536.22%







QTD Net loan charge offs (recoveries) as a percentage of average

loans, annualized


0.00%


0.05%


-0.02%







Net nonperforming loans as a percentage of total loans


0.16%


0.17%


0.28%







Nonperforming assets as a percentage of total assets


0.75%


0.82%


1.08%







Consolidated classified asset ratio(1)


25.14%


26.52%


24.27%







Past due as a percentage of total loans(2)


0.14%


0.19%


0.16%
























Three months ended



Nine months ended





September 30,


June 30,


September 30,



September 30,


September 30,





2015


2015


2014



2015


2014

ALLOWANCE FOR LOAN LOSSES












Balance at beginning of period


$ 16,013


$ 15,724


$ 15,675



$ 15,637


$ 15,917

Provision for loan losses


625


550


-



1,175


-

Loan charge-offs


(105)


(454)


(23)



(631)


(654)

Loan recoveries


79


193


70



431


459

Net(charge-offs) recoveries


(26)


(261)


47



(200)


(195)

Balance at end of period


$ 16,612


$ 16,013


$ 15,722



$ 16,612


$ 15,722



(1)

Consolidated 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)








3rd Quarter

2nd Quarter

1st Quarter

4th Quarter

3rd Quarter


2015

2015

2015

2014

2014

EARNINGS






Net interest income

$ 18,308

$ 17,696

$ 14,972

$ 14,374

$ 14,572

Provision for loan loss

$ 625

$ 550

$ -

$ -

$ -

Noninterest income

$ 1,714

$ 1,627

$ 1,276

$ 1,318

$ 1,197

Noninterest expense

$ 11,182

$ 11,030

$ 11,972

$ 9,798

$ 9,149

Net income

$ 5,325

$ 5,095

$ 2,802

$ 3,631

$ 4,431

Basic earnings per share

$ 0.27

$ 0.26

$ 0.15

$ 0.20

$ 0.25

Diluted earnings per share

$ 0.27

$ 0.26

$ 0.15

$ 0.20

$ 0.25

Average shares outstanding

19,591,666

19,562,363

18,232,076

17,717,270

17,749,217

Average diluted shares outstanding

19,816,770

19,788,884

18,444,971

17,939,752

17,970,458







PERFORMANCE RATIOS






Return on average assets

1.14%

1.14%

0.72%

0.97%

1.18%

Return on average equity (book)

9.91%

9.68%

5.91%

7.85%

9.69%

Return on average equity (tangible) (1)

12.42%

12.18%

7.05%

9.01%

11.13%

Net interest margin - fully tax equivalent yield (2)

4.32%

4.39%

4.29%

4.25%

4.29%

Efficiency ratio (tax equivalent) (3)

55.12%

56.30%

72.47%

61.39%

57.04%

Full-time equivalent employees

321

322

317

288

289







CAPITAL






Tier 1 leverage ratio

9.88%

10.01%

11.31%

11.33%

11.20%

Common Equity tier 1 ratio

11.00%

11.27%

11.41%

NA

NA

Tier 1 risk based ratio

11.49%

11.78%

11.97%

14.48%

14.44%

Total risk based ratio

12.58%

12.88%

13.08%

15.73%

15.69%

Book value per share

$ 11.06

$ 10.82

$ 10.80

$ 10.39

$ 10.30

Regular cash dividend per share

$ 0.11

$ 0.10

$ 0.10

$ 0.10

$ 0.10

Special cash dividend per share

NA

NA

NA

$ 0.05

$ 0.03







ASSET QUALITY






Allowance for loan losses (ALL)

$ 16,612

$ 16,013

$ 15,724

$ 15,637

$ 15,722

Non performing loans (NPLs) net of government guarantees

$ 2,231

$ 2,258

$ 2,635

$ 1,989

$ 2,932

Non performing assets (NPAs) net of government guarantees

$ 14,085

$ 14,924

$ 16,802

$ 15,363

$ 16,109

Net loan (recoveries) charge offs

$ 26

$ 261

$ (87)

$ 85

$ (47)

ALL as a percentage of gross loans

1.23%

1.23%

1.25%

1.50%

1.52%

ALL as a % NPLs, net of government guarantees

744.60%

709.17%

596.74%

786.17%

536.22%

Net loan charge offs (recoveries) to average loans

0.00%

0.05%

-0.03%

0.03%

-0.02%

Net NPLs as a percentage of total loans

0.16%

0.17%

0.21%

0.19%

0.28%

Nonperforming assets as a percentage of total assets

0.75%

0.82%

0.94%

1.02%

1.08%

Consolidated classified asset ratio(4)

25.14%

26.52%

27.60%

24.54%

24.27%

Past due as a percentage of total loans(5)

0.14%

0.19%

0.35%

0.15%

0.16%







END OF PERIOD BALANCES






Total securities and short term deposits

$ 398,366

$ 393,408

$ 391,988

$ 356,804

$ 353,893

Total loans net of allowance

$ 1,339,195

$ 1,288,919

$ 1,238,982

$ 1,029,384

$ 1,019,127

Total earning assets

$ 1,737,561

$ 1,682,327

$ 1,630,970

$ 1,386,188

$ 1,373,020

Total assets

$ 1,878,283

$ 1,830,942

$ 1,780,849

$ 1,504,325

$ 1,489,719

Total non-interest bearing deposits

$ 544,009

$ 531,697

$ 503,735

$ 407,311

$ 390,790

Core deposits(6)

$ 1,465,547

$ 1,445,218

$ 1,417,397

$ 1,110,861

$ 1,047,211

Total deposits

$ 1,524,954

$ 1,514,181

$ 1,496,747

$ 1,209,093

$ 1,145,235







AVERAGE BALANCES






Total securities and short term deposits

$ 400,428

$ 398,836

$ 371,061

$ 356,389

$ 351,695

Total loans net of allowance

$ 1,319,622

$ 1,257,366

$ 1,077,706

$ 1,013,049

$ 1,023,266

Total earning assets

$ 1,720,050

$ 1,656,202

$ 1,448,767

$ 1,369,438

$ 1,374,961

Total assets

$ 1,859,418

$ 1,800,527

$ 1,573,767

$ 1,484,542

$ 1,488,747

Total non-interest bearing deposits

$ 538,768

$ 508,259

$ 439,780

$ 404,569

$ 391,738

Core deposits(6)

$ 1,482,984

$ 1,409,836

$ 1,200,618

$ 1,082,950

$ 1,037,336

Total deposits

$ 1,545,465

$ 1,483,305

$ 1,283,604

$ 1,176,938

$ 1,141,897



(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)

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.

(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.

FOR MORE INFORMATION CONTACT:

Michael Dunne


Public Information Officer


541-338-1428




www.therightbank.com


Email: michael.dunne@therightbank.com

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/pacific-continental-corporation-reports-third-quarter-2015-results-300159414.html

SOURCE Pacific Continental Corporation

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