Pacific Continental Corporation Reports Fourth Quarter And Full Year 2013 Results

The following excerpt is from the company's SEC filing.

EUGENE, Ore., January 22, 2014 – Pacific Continental Corporation (Nasdaq: PCBK), the holding company of Pacific Continental Bank, today reported financial results for the fourth quarter and full year 2013.

  •   Declared first quarter 2014 regular quarterly cash dividend of $0.10 per share and special cash dividend of $0.10 per share.

Net income for fourth quarter 2013 was $3.7 million or $0.20 per diluted share compared to net income of $3.4 million or $0.19 per diluted share in fourth quarter 2012. Return on average assets, average book equity, and average tangible equity were 1.00%, 8.06%, and 9.28%, respectively, in fourth quarter 2013, compared to 0.99%, 7.33%, and 8.33% for the same quarter last year.

Net income for the full year 2013 was a record $13.8 million or $0.76 per diluted share compared to net income of $12.7 million or $0.69 per share for the year 2012. Included in 2013 full year results was $1.2 million of one-time merger related expenses related to the Century Bank acquisition, which reduced current year net income by $822 thousand or $0.05 per diluted share.

“We are certainly pleased with our 2013 results and the shareholder returns for the year both in terms of share appreciation and dividends,” said Hal Brown, chief executive officer. “Our strong capital position, liquidity and credit quality, together with the improving economic conditions, support our optimistic outlook as we begin 2014,” added Brown.

Outstanding gross loans at December 31, 2013, were $994.8 million, up $16.1 million over the prior quarter end and up $123.5 million from year-end 2012. Excluding the loans acquired in the Century Bank transaction, organic loan growth for 2013 was $80.5 million for an annualized growth rate of 9.24%. Loan growth for the fourth quarter and full year was primarily centered in owner-occupied commercial real estate, construction lending and commercial loans.

At December 31, 2013, loans to dental professionals totaled $307.3 million, representing 30.9% of the total loan portfolio. Outstanding loans to dental professionals grew by $36.5 million or 13.5% over December 31, 2012.

“Our sustained loan growth was attributable to an improving economy, our niche focus and a strong team of relationship bankers that successfully retained and added several client relationships during the year,” said Roger Busse, president and chief operating officer. “Our dental lending program continued to be very successful both in terms of growth and credit quality,” added Busse.

Period-end Company-defined core deposits were $990.3 million, an increase of $51.7 million or 5.5% over the prior year end. At period-end December 31, 2013, noninterest-bearing demand deposits totaled $366.9 million and represented 37.0% of core deposits.

The fourth quarter 2013 net interest margin, on a tax equivalent basis, was 4.39%, representing an increase of 28 basis points over the 4.11% reported for the fourth quarter 2012. Included in the fourth quarter net interest margin was a $220 thousand prepayment penalty from an early payoff of a loan, which contributed 7 basis points to the current quarter’s margin. In addition, the accretion of the Century Bank loan fair value market adjustment positively impacted the net interest margin by 4 basis points.

The net interest margin for the full year 2013, on a tax equivalent basis, was 4.37%, an increase of 13 basis points over the 4.24% net interest margin reported for 2012. Earning asset yields remained relatively unchanged in 2013 when compared to 2012, primarily due to an increase in yield on the securities portfolio. Most of the improvement in the annual net interest margin was attributable to a lower cost of funds as the cost of interest-bearing liabilities was down 17 basis points in 2013 from 2012.

At December 31, 2013, classified assets totaled $52.0 million and represented 29.02% of regulatory capital, compared to $56.1 million and 31.18% of regulatory capital at December 31, 2012. Classified asset levels increased by $5.8 million as a result of the Century Bank acquisition. Fourth quarter 2013 classified assets were lower than pre-acquisition levels.

Nonperforming assets, a subcategory of classified assets, totaled $21.0 million at December 31, 2013, or 1.45% of total assets, a decrease from the December 31, 2012 ratio of 1.92%. Nonperforming assets were comprised of $4.6 million in nonperforming loans, net of government guarantees, and $16.4 million in other real estate owned. Loans past-due 30-89 days were 0.23% of total loans at December 31, 2013, compared to 0.30% at December 31, 2012.

“This is the fourth consecutive year of improvement in our credit quality statistics and we are optimistic this trend will continue in 2014,” said Casey Hogan, executive vice president and chief credit officer.

The Company made no provision for loan losses during the fourth quarter 2013 and provisioned $250 thousand for the full year 2013. Net loan charge offs for the year 2013 were $678 thousand or 0.07% of average outstanding loans. The allowance for loan losses as a percentage of outstanding loans at December 31, 2013, was 1.60% compared to 1.88% at December 31, 2012. The allowance for loan losses as a percentage of total nonperforming loans, net of government guarantees, improved to 345.42% at December 31, 2013, from 193.29% reported one year ago, reflecting both a reduction in nonperforming loans and an overall general improvement in the quality of the loan portfolio.

The Company’s capital ratios continued to be well above the minimum FDIC “well-capitalized” designated levels. At December 31, 2013, the Company’s Tier 1 leverage ratio, Tier 1 risk-based capital ratio, and Total risk-based capital ratios were 11.49%, 14.90% and 16.15%, respectively, as compared to 12.33%, 16.90% and 18.15% at December 31, 2012, reflecting improved capital leverage. The FDIC’s minimum “well-capitalized” ratios are 5.00%, 6.00% and 10.00%, respectively.

Noninterest income for the fourth quarter was $1.6 million, up $181 thousand over fourth quarter 2012. Noninterest expense in fourth quarter 2013 was up $1.1 million over fourth quarter 2012, with a portion of the increase centered in other real estate expense, primarily attributable to valuation write-downs. In addition, employee compensation was up, reflecting the addition of business development personnel who have increased calling efforts during 2013, resulting in part in the Bank’s loan growth during the period. The fourth quarter 2013 efficiency ratio was 62.97% compared to 64.26% for fourth quarter 2012.

Management will conduct a live conference call and audio webcast for interested parties relating to the Company’s results for the fourth quarter and full-year 2013 on Thursday, January 23, 2014, at 11:00 a.m. Pacific / 2:00 p.m. Eastern. To listen to the conference call, interested parties should call 866-292-1418. 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.

Pacific Continental Bank, the operating subsidiary of Pacific Continental Corporation, delivers highly personalized services through fourteen banking offices in Oregon and Washington. The Bank also operates loan production offices in Tacoma, Washington and Denver, Colorado. Pacific Continental, with $1.4 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.

(2)  Core deposits include demand, interest checking, money market, savings, and local time deposits, including local nonpublic time deposits in excess of $100 thousand.

(4) National health care loans include loans to heath 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.

(5)  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 $263 and $236 for the three months ended December 31, 2013, and December 31, 2012, respectively, and $1,033 thousand and $875 thousand for the twelve months ended December 31, 2013, and December 31 , 2012, respectively.

(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.

The above information was disclosed in a filing to the SEC. To see this filing in its entirety, click here.

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