EUGENE, Ore., Oct. 26, 2016 /PRNewswire/ -- Pacific Continental Corporation (Nasdaq: PCBK), the holding company of Pacific Continental Bank, today reported financial results for the third quarter ended September 30, 2016.

Third Quarter Highlights:

  • On September 6, 2016, completed the acquisition of Foundation Bank, a business bank located in Bellevue, WA with approximately $450.0 million in assets at closing.  Successful core systems integration completed on October 10, 2016.
  • Quarterly organic loan growth of $52.1 million.
  • Quarterly organic core deposit growth of $144.8 million.
  • Net income of $4.9 million, or $0.23 per diluted share.
  • Tax-equivalent net interest margin of 4.22%.
  • Paid third quarter 2016 regular quarterly cash dividend of $0.11 per share.
  • Recognized by Portland Business Journal with the Healthiest Companies Award.
  • Recognized by 425 Business Magazine with the 30-Under-30 Award.

Net Income Highlights

Net income for the third quarter 2016 was $4.9 million, or $0.23 per diluted share, and included non-core costs associated with our acquisition of Foundation Bank, which were approximately $1.8 million, or approximately $0.06 per diluted share.  Also included in third quarter results was $589 thousand, or $0.03 per diluted share, of net income related to the Foundation Bank operations from the time of transaction closing on September 6, 2016.  The provision for loan losses expense in the third quarter was $1.4 million, compared to $2.0 million for the second quarter. 

Annualized returns on average assets, average equity and average tangible equity for third quarter 2016 were 0.89%, 8.05%, and 10.14%, respectively, compared to 0.53%, 4.67%, and 5.80% for second quarter 2016. Annualized returns on average assets, average equity, and average tangible equity for the nine months ended September 30, 2016 were 0.85%, 7.55%, and 9.43%, respectively, compared to 1.01%, 8.60%, and 10.62% for the same time period in 2015.

"This was a milestone quarter, as we successfully completed the acquisition and integration of Foundation Bank, which has significantly increased our presence and market share in the vibrant Puget Sound region," said Roger Busse, chief executive officer. "We are proud of our management teams and leadership across all regions, as we continued to drive solid organic growth and earnings."

Third quarter 2016 noninterest income was $1.9 million, an increase of $172 thousand from the second quarter 2016.  Approximately $55 thousand of the increase related to operating income from Foundation Bank while the remainder was due to a one-time payment of $160 thousand received from the Small Business Administration, related to expense reimbursement incurred by a previously acquired bank.  There were no gains on sales of securities during the third quarter, compared to $71 thousand during the second quarter. 

Noninterest expense for the third quarter 2016 was $13.8 million, this represented a decrease of $1.1 million from the second quarter of 2016, with $556 thousand of the savings resulting from decreased reserving related to our partially self-funded health insurance plan, and $571 thousand resulting from decreased legal and professional expenses.  During the second quarter we recorded $550 thousand of additional reserve expense related to higher than forecasted claim activity in our partially self-funded health insurance plan.  Claim activity returned to more normal levels for the third quarter.  The decrease in legal and professional expenses related to the annual director's equity grant of $240 thousand that occurred during the second quarter and lower legal bills related to other projects.

Net Interest Margin

The third quarter 2016 net interest margin was 4.22%, a decrease of 5 basis points from the second quarter net interest margin.  As we stated during our second quarter earnings call, we anticipated some margin compression during the third quarter and going forward, due primarily to the increased interest expense from our subordinated notes offering in the second quarter 2016.  The impact of the interest expense associated with the subordinated debt was approximately 11 basis points during the third quarter.  Accretion income for the third quarter 2016 was $877 thousand compared to $156 thousand for the second quarter 2016.  As outlined below, the core margin was 3.99% for the third quarter 2016 compared to 4.20% for the second quarter 2016. 

Dollars in thousands

Third Quarter 2016

Second Quarter 2016

Average
Balance

Income
(Expense)

Yield

Average
Balance

Income
(Expense)

Yield

Federal funds sold and interest-bearing deposits

$         28,811

$            40

0.55%

$         15,597

$            19

0.49%

Federal Home Loan Bank stock

6,975

46

2.62%

7,004

20

1.15%

Securities available-for-sale (1)

421,085

2,691

2.54%

385,777

2,550

2.66%

Net loans(2)

1,558,018

19,315

4.93%

1,444,956

17,891

4.98%

Earning assets

2,014,889

22,092

4.36%

1,853,334

20,480

4.44%












Interest bearing liabilities

1,230,806

(1,891)

-0.61%

1,121,088

(1,137)

-0.41%












Core margin (non-GAAP)

2,014,889

20,201

3.99%

1,853,334

19,343

4.20%

Acquired loan accretion

877

0.17%


156

0.03%

Prepayment penalties on loans

276

0.05%


166

0.04%

Net interest margin

$   2,014,889

$    21,354

4.22%

$   1,853,334

$    19,665

4.27%

(1)Tax-exempt security 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 $260 and $256 for the three months ended September 30, 2016  and June 30, 2016, respectively. Net interest margin was positively impacted by 5 and 6 basis points, respectively, in these periods.

(2) Tax-exempt loan 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 $323 and $262 for the three months ended September 30, 2016  and June 30, 2016, respectively. Net interest margin was positively impacted by 6 basis points in each period.

 

Balance Sheet Highlights

Gross loans grew by $322.5 million in third quarter 2016, and totaled $1.81 billion at September 30, 2016.  Included in the loan growth was $270.5 million of loans acquired in the Foundation Bank transaction.  Organic loan growth was $52.1 million for the third quarter.  Gross loan growth through the first nine months of 2016 was $402.6 million.  Excluding the $270.5 million in acquired loans, our organic loan growth was $132.1 million, or 12.55% annualized.  At September 30, 2016, loans to dental practitioners totaled $370.1 million and represented 20.46% of the loan portfolio. This represented an increase of $325 thousand over second quarter 2016, where loans to dental practitioners represented 24.88% of the loan portfolio. 

Period-end Company-defined core deposits at September 30, 2016, were $2.05 billion, an increase of $541.3 million from the second quarter 2016.  Included in the core deposit growth was $396.5 million of deposits acquired in the Foundation Bank transaction.  Organic core deposit growth was $144.8 million for the third quarter, with $84.3 million, or 58.22%, of our growth coming from the large depositor portfolio.  The increase from the large depositor portfolio was led by one client that increased its deposits by $64.3 million during the quarter.  The increase was the result of a business sale and we anticipate that the majority of these funds will leave the Bank during the fourth quarter.  Core deposit growth through the first nine months of 2016 was $515.4 million.  Excluding the $396.5 million in acquired deposits, our organic core deposit growth was $118.9 million, or 10.35% annualized.

"We are proud of our outstanding team of bankers and they continue to produce solid organic loan growth", said Casey Hogan, chief operating officer.  "Our organic core deposit growth was outstanding in the third quarter and we are pleased that more than 40% of the growth came in our small depositor portfolio."

Asset Quality

As of September 30, 2016, the allowance for loan losses as a percentage of outstanding loans was 1.14%, a decrease from the 1.29% reported at June 30, 2016.  The decrease was largely the result of the Foundation Bank acquired loans included at their fair value, net of any credit risk adjustments.  At September 30, 2016, the allowance for loan losses as a percentage of nonperforming loans, net of government guarantees, decreased to 210.23% from 1,172.72% at June 30, 2016. During the third quarter 2016, the Company recorded net recoveries of $24 thousand, compared to net loan losses of $419 thousand during the second quarter 2016.  During the third quarter, the Company made a $1.4 million provision for loan losses compared to $2.0 million in the second quarter 2016.

At September 30, 2016, nonperforming assets, net of government guarantees, totaled $22.8 million, or 0.90% of total assets, compared to $13.7 million, or 0.68% of total assets, at June 30, 2016. The increase primarily related to loans and other real estate owned acquired in the Foundation Bank transaction.  Nonperforming assets at September 30, 2016, were comprised of $9.8 million of nonperforming loans, net of government guarantees of $2.4 million, and $13.1 million in other real estate owned. Loans past-due 30-89 days were 0.01% of total loans at September 30, 2016, compared to 0.02% of total loans at June 30, 2016. 

Capital Adequacy

The Company's consolidated capital ratios continued to be above the minimum thresholds for the FDIC's "well-capitalized" designation. At September 30, 2016, the Company's capital ratios were as follows:

 

September 30, 2016

Minimum dollar requirements

Pacific
Continental
Corporation

Regulatory
Minimum (Well-
Capitalized)

Excess

Tier I capital (to leverage assets)

$               215,471

$                   104,329

$ 111,142

Common equity tier 1 capital (to risk weighted assets)

$               203,359

$                   140,135

$   63,224

Tier I capital (to risk weighted assets)

$               215,471

$                   172,474

$   42,997

Total capital (to risk weighted assets)

$               270,622

$                   215,593

$   55,029

Minimum percentage requirements

Pacific
Continental
Corporation

Regulatory
Minimum (Well-
Capitalized)

Tier I capital (to leverage assets)

10.33%

5.00%

Common equity tier 1 capital (to risk weighted assets)

9.43%

6.50%

Tier I capital (to risk weighted assets)

9.99%

8.00%

Total capital (to risk weighted assets)

12.55%

10.00%

 

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.

Certain Financial measures such as tangible shareholders' equity, and tangible assets, 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,


2016

2016

2015


(In thousands)







Total shareholders' equity

$           276,471

$       226,426

$           216,676

Subtract:





Goodwill

61,436

40,027

39,075

Core deposit intangible assets

9,248

3,657

4,027

Tangible shareholders' equity (non-GAAP)

$           205,787

$       182,742

$           173,574







Total assets

$        2,539,060

$    2,025,410

$        1,878,283

Subtract:





Goodwill

61,436

40,027

39,074

Core deposit intangible assets

9,248

3,657

4,028

Total tangible assets (non-GAAP)

$       2,468,376

$   1,981,726

$       1,835,181

 

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 2016 on Thursday, October 27, 2016, 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 wholly-owned 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 slightly more than $2.5 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, net interest margin compression, strategic focus,  capital position, liquidity, credit quality, credit quality trends, and the impact and effects of recent or pending 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 the PSLRA's safe harbor provisions.

PACIFIC CONTINENTAL CORPORATION and subsidiary

Consolidated Income Statements

(Dollars in thousands, except share and per share amounts)

(Unaudited)













Three months ended

Linked 

Year over


September 30,

June 30,

September 30,

Quarter

Year  


2016

2016

2015

% Change

% Change

Interest and dividend income









Loans

$         20,145

$       17,951

$         17,240

12.22%

16.85%

Taxable securities

1,995

1,838

1,713

8.54%

16.46%

Tax-exempt securities

482

476

490

1.26%

-1.63%

Federal funds sold and interest-bearing deposits with banks

40

19

7

110.53%

471.43%


22,662

20,284

19,450

11.72%

16.51%











Interest expense









Deposits

984

797

854

23.46%

15.22%

Federal Home Loan Bank & Federal Reserve borrowings

286

282

227

1.42%

25.99%

Subordinated debentures

553

-

-

NA

NA

Junior subordinated debentures

66

56

57

17.86%

15.79%

Federal funds purchased

2

2

4

0.00%

-50.00%


1,891

1,137

1,142

66.31%

65.59%











Net interest income

20,771

19,147

18,308

8.48%

13.45%











Provision for loan losses

1,380

1,950

625

-29.23%

120.80%

Net interest income after provision for loan losses

19,391

17,197

17,683

12.76%

9.66%











Noninterest income









Service charges on deposit accounts

717

688

703

4.22%

1.99%

Bankcard income

314

294

276

6.80%

13.77%

Bank-owned life insurance income

172

145

156

18.62%

10.26%

Gain on sale of investment securities

-

71

143

-100.00%

-100.00%

Impairment losses on investment securities (OTTI)

(2)

-

-

NA

NA

Other noninterest income

718

549

436

30.78%

64.68%


1,919

1,747

1,714

9.85%

11.96%











Noninterest expense









Salaries and employee benefits

7,520

8,005

6,822

-6.06%

10.23%

Premises and equipment

1,202

1,087

1,148

10.58%

4.70%

Data processing

924

893

838

3.47%

10.26%

Legal and professional fees

569

1,140

496

-50.09%

14.72%

Business development

460

516

369

-10.85%

24.66%

FDIC insurance assessment

273

286

283

-4.55%

-3.53%

Other real estate expense (income), net

71

(113)

122

-162.83%

-41.80%

Merger related expenses(1)

1,767

1,978

-

-10.67%

NA

Other noninterest expense

1,039

1,140

1,104

-8.86%

-5.89%


13,825

14,932

11,182

-7.41%

23.64%











Income before provision for income taxes

7,485

4,012

8,215

86.57%

-8.89%

Provision for income taxes

2,634

1,406

2,890

87.34%

-8.86%











Net income

$           4,851

$         2,606

$           5,325

86.15%

-8.90%











Earnings per share:









Basic

$              0.24

$           0.13

$              0.27

84.62%

-11.11%

Diluted

$              0.23

$           0.13

$              0.27

76.92%

-14.81%











Weighted average shares outstanding:









Basic

20,511,392

19,697,314

19,591,666














Common stock equivalents









attributable to stock-based awards

165,572

171,653

225,104



Diluted

20,676,964

19,868,967

19,816,770














PERFORMANCE RATIOS









Return on average assets 

0.89%

0.53%

1.14%



Return on average equity (book) 

8.05%

4.67%

9.91%



Return on average equity (tangible) (2)

10.14%

5.80%

12.42%



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

4.22%

4.27%

4.32%



Efficiency ratio (4)

60.24%

70.60%

55.12%










(1) Represents expenses associated with the acquisition of Foundation Bank.  

(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 and subsidiary

Year-to-Date Consolidated Income Statements

(Dollars in thousands, except share and per share amounts)

(Unaudited)









Nine months ended

Year over


September 30,

Year  


2016

2015

% Change

Interest and dividend income





Loans

$       55,810

$       48,020

16.22%

Taxable securities

5,551

4,825

15.05%

Tax-exempt securities

1,435

1,491

-3.76%

Federal funds sold and interest-bearing deposits with banks

104

23

352.17%


62,900

54,359

15.71%







Interest expense





Deposits

2,678

2,509

6.74%

Federal Home Loan Bank and Federal Reserve borrowings

758

694

9.22%

Subordinated debentures

553

-

NA

Junior subordinated debentures

179

169

5.92%

Federal funds purchased

6

10

-40.00%


4,174

3,382

23.42%







Net interest income

58,726

50,977

15.20%







Provision for loan losses

3,575

1,175

204.26%

Net interest income after provision for loan losses

55,151

49,802

10.74%







Noninterest income





Service charges on deposit accounts

2,099

1,939

8.25%

Bankcard income

899

687

30.86%

Bank-owned life insurance income

463

435

6.44%

Gain on sale of investment securities

309

336

-8.04%

Impairment losses on investment securities (OTTI)

(19)

(13)

46.15%

Other noninterest income

1,726

1,234

39.87%


5,477

4,618

18.60%







Noninterest expense





Salaries and employee benefits

23,084

20,223

14.15%

Premises and equipment

3,404

3,221

5.68%

Data processing

2,682

2,343

14.47%

Legal and professional fees

2,321

1,386

67.46%

Business development

1,492

1,134

31.57%

FDIC insurance assessment

848

769

10.27%

Other real estate (income) expense, net

(32)

303

-110.56%

Merger related expense(1)

3,745

1,836

103.98%

Other noninterest expense

3,222

2,971

8.45%


40,766

34,186

19.25%







Income before provision for income taxes

19,862

20,234

-1.84%

Provision for income taxes

6,946

7,012

-0.94%







Net income

$       12,916

$       13,222

-2.31%







Earnings per share:





Basic

$           0.65

$           0.69

-5.80%

Diluted

$           0.64

$           0.68

-5.88%







Weighted average shares outstanding:





Basic

19,940,709

19,133,682








Common stock equivalents





attributable to stock-based awards

154,813

224,308

Diluted

20,095,522

19,357,990








PERFORMANCE RATIOS





Return on average assets 

0.85%

1.01%

Return on average equity (book) 

7.55%

8.60%

Return on average equity (tangible) (2)

9.43%

10.62%

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

4.25%

4.34%

Efficiency ratio(4)

62.74%

60.62%


(1) Represents expenses associated with the acquisition of Foundation Bank during 2016 and the acquisition of Capital Pacific Bank, completed  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.

 

PACIFIC CONTINENTAL CORPORATION and subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except share and per share amounts)

(Unaudited)








Linked 

Year over


September 30,

June 30,

September 30,

Quarter

Year  


2016

2016

2015

% Change

% Change

ASSETS








Cash and due from banks

$         35,819

$       25,238

$         21,698

41.92%

65.08%

Interest-bearing deposits with banks

71,353

18,151

11,293

293.11%

531.83%

Total cash and cash equivalents

107,172

43,389

32,991

147.00%

224.85%










Securities available-for-sale

482,408

396,230

387,073

21.75%

24.63%










Loans, net of deferred fees

1,806,736

1,484,152

1,355,807

21.74%

33.26%

Allowance for loan losses

(20,531)

(19,127)

(16,612)

7.34%

23.59%

   Net Loans

1,786,205

1,465,025

1,339,195












Interest receivable

5,957

6,334

5,688

-5.95%

4.73%

Federal Home Loan Bank stock

4,643

8,351

6,768

-44.40%

-31.40%

Property and equipment, net of accumulated depreciation

19,656

19,086

17,708

2.99%

11.00%

Goodwill and intangible assets, net

70,684

43,684

43,102

61.81%

63.99%

Deferred tax asset

7,380

2,797

5,319

163.85%

38.75%

Other real estate owned

13,066

12,108

11,854

7.91%

10.22%

Bank-owned life insurance

34,927

23,174

22,727

50.72%

53.68%

Other assets

6,962

5,232

5,858

33.07%

18.85%










Total assets

$   2,539,060

$ 2,025,410

$   1,878,283

25.36%

35.18%










LIABILITIES AND SHAREHOLDERS' EQUITY








Deposits








Noninterest-bearing demand

$       901,290

$    624,146

$       544,009

44.40%

65.68%

Savings and interest-bearing checking

1,082,202

826,854

831,933

30.88%

30.08%

Core time deposits

65,860

57,019

89,605

15.51%

-26.50%

Total core deposits (2)

2,049,352

1,508,019

1,465,547

35.90%

39.84%










Non-core time deposits

113,281

92,113

59,407

22.98%

90.69%

Total deposits

2,162,633

1,600,132

1,524,954

35.15%

41.82%










Securities sold under agreements to repurchase

1,107

1,029

302

7.58%

266.56%

Federal funds and overnight funds purchased

-

-

5,000

NA

-100.00%

Federal Home Loan Bank borrowings

45,500

151,500

116,500

-69.97%

-60.94%

Subordinated debentures

34,072

34,092

-

-0.06%

NA

Junior subordinated debentures

11,272

8,248

8,248

36.66%

36.66%

Accrued interest and other payables

8,005

3,983

6,603

100.98%

21.23%

Total liabilities

2,262,589

1,798,984

1,661,607

25.77%

36.17%










Shareholders' equity








Common stock: 50,000,000 shares authorized.  Shares issued and outstanding: 22,603,421 at September 30, 2016, 19,731,925 at June 30, 2016 and 19,591,703 at September 30, 2015

205,120

156,678

155,695

30.92%

31.74%

Retained earnings

66,112

63,431

56,320

4.23%

17.39%

Accumulated other comprehensive income

5,239

6,317

4,661

-17.07%

12.40%


276,471

226,426

216,676

22.10%

27.60%










Total liabilities and shareholders' equity

$   2,539,060

$ 2,025,410

$   1,878,283

25.36%

35.18%




















CAPITAL RATIOS








Total capital (to risk weighted assets)

12.55%

13.54%

12.58%


Tier I capital (to risk weighted assets)

9.99%

10.52%

11.49%


Common equity tier 1 capital (to risk weighted assets)

9.43%

10.07%

11.00%


Tier I capital (to leverage assets)

10.33%

9.62%

9.88%


Tangible common equity (to tangible assets)(1)

8.34%

9.22%

9.46%


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

9.55%

10.30%

11.08%












OTHER FINANCIAL DATA








Shares outstanding at end of period

22,603,421

19,731,925

19,591,703


Tangible shareholders' equity(1)

$       205,787

$    182,742

$       173,574


Book value per share

$           12.23

$         11.48

$           11.06


Tangible book value per share

$              9.10

$           9.26

$              8.86



(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.  

NA Not applicable





 

PACIFIC CONTINENTAL CORPORATION and subsidiary

Loans by Type

(Dollars in thousands)

(Unaudited)



















Linked 

Year over


September 30,

June 30,

September 30,

Quarter

Year  


2016

2016

2015

% Change

% Change

LOANS BY TYPE









Real estate secured loans:









Permanent loans:









Multi-family residential

$         79,126

$       66,403

$         64,083

19.16%

23.47%

Residential 1-4 family

61,498

51,652

58,313

19.06%

5.46%

Owner-occupied commercial

425,879

375,911

353,255

13.29%

20.56%

Nonowner-occupied commercial

431,119

339,444

288,539

27.01%

49.41%

Total permanent real estate loans

997,622

833,410

764,190

19.70%

30.55%

Construction loans:









Multi-family residential

24,567

16,743

9,340

46.73%

163.03%

Residential 1-4 family

42,130

34,372

30,834

22.57%

36.63%

Commercial real estate

78,369

57,790

39,259

35.61%

99.62%

Commercial bare land and acquisition and development

19,050

10,551

16,947

80.55%

12.41%

Residential bare land and acquisition and development

8,852

6,658

7,602

32.95%

16.44%

Total construction real estate loans

172,968

126,114

103,982

37.15%

66.34%

Total real estate loans

1,170,590

959,524

868,172

22.00%

34.83%

Commercial loans

630,091

518,529

479,018

21.52%

31.54%

Consumer loans

3,201

3,313

3,575

-3.38%

-10.46%

Other loans

4,764

4,737

6,280

0.57%

-24.14%

Gross loans

1,808,646

1,486,103

1,357,045

21.70%

33.28%

Deferred loan origination fees

(1,910)

(1,951)

(1,238)

-2.10%

54.28%


1,806,736

1,484,152

1,355,807

21.74%

33.26%

Allowance for loan losses

(20,531)

(19,127)

(16,612)

7.34%

23.59%


$   1,786,205

$ 1,465,025

$   1,339,195

21.92%

33.38%











SELECTED MARKET LOAN DATA









  Eugene market gross loans, period-end

$       404,858

$    396,260

$       368,666

2.17%

9.82%

  Portland market gross loans, period-end

728,749

697,664

647,527

4.46%

12.54%

  Seattle market gross loans, period-end

423,581

141,788

137,830

198.74%

207.32%

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

251,458

250,391

203,022

0.43%

23.86%

    Total gross loans, period-end

$   1,808,646

$ 1,486,103

$   1,357,045

21.70%

33.28%











DENTAL LOAN DATA (2)









  Local dental gross loans, period-end

$       150,898

$    152,109

$       155,137

-0.80%

-2.73%

  National dental gross loans, period-end

219,237

217,701

185,161

0.71%

18.40%

    Total gross dental loans, period-end

$       370,135

$    369,810

$       340,298

0.09%

8.77%

(1) National health care loans include loans to health care professionals, including dental and veterinary 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 and subsidiary

Selected Other Financial Information and Ratios

(Dollars in thousands)

(Unaudited)













Three months ended

Nine months ended


September 30,

June 30,

September 30,

September 30,

September 30,


2016

2016

2015

2016

2015

BALANCE SHEET AVERAGES









  Loans, net of deferred fees

$   1,577,365

$ 1,463,112

$   1,335,897

$   1,487,349

$   1,235,031

  Allowance for loan losses

(19,347)

(18,156)

(16,275)

(18,327)

(15,913)

    Loans, net of allowance

1,558,018

1,444,956

1,319,622

1,469,022

1,219,118

  Securities, short-term deposits and FHLB stock

456,871

408,378

406,579

427,937

398,978

   Earning assets

2,014,889

1,853,334

1,726,201

1,896,959

1,618,096

  Noninterest-earning assets

149,098

135,651

133,217

139,968

127,521

        Assets

$   2,163,987

$ 1,988,985

$   1,859,418

$   2,036,927

$   1,745,617











  Interest-bearing core deposits(1)

$       960,974

$    921,219

$       944,216

$       957,038

$       869,548

  Noninterest-bearing core deposits(1)

687,803

637,987

538,768

647,967

495,965

    Core deposits(1)

1,648,777

1,559,206

1,482,984

1,605,005

1,365,513

  Noncore interest-bearing deposits

107,753

68,536

62,481

80,092

72,903

    Deposits

1,756,530

1,627,742

1,545,465

1,685,097

1,438,416

  Borrowings

161,299

130,681

93,211

116,680

95,011

  Other noninterest-bearing liabilities

6,374

6,120

7,512

6,559

6,586

       Liabilities

1,924,203

1,764,543

1,646,188

1,808,336

1,540,013

  Shareholders' equity (book)

239,784

224,442

213,230

228,591

205,604

       Liabilities and equity

$   2,163,987

$ 1,988,985

$   1,859,418

$   2,036,927

$   1,745,617











  Shareholders' equity (tangible)(2)

$       190,267

$    180,691

$       170,062

$       182,950

$       166,387











Period-end earning assets

$   2,339,966

$ 1,879,406

$   1,725,398














SELECTED MARKET DEPOSIT DATA









  Eugene market core deposits, period-end(1)

$       785,053

$    712,061

$       747,298



  Portland market core deposits, period-end(1)

671,747

590,880

549,113



  Seattle market core deposits, period-end(1)

592,552

205,078

169,136



    Total core deposits, period-end(1)

2,049,352

1,508,019

1,465,547



  Other deposits, period-end

113,281

92,113

59,407



      Total

$   2,162,633

$ 1,600,132

$   1,524,954














  Eugene market core deposits, average(1)

$       721,271

$    738,435

$       776,755



  Portland market core deposits, average(1)

631,440

624,490

537,911



  Seattle market core deposits, average(1)

296,066

196,281

168,318



    Total core deposits, average(1)

1,648,777

1,559,206

1,482,984



  Other deposits, average

107,753

68,536

62,481



      Total

$   1,756,530

$ 1,627,742

$   1,545,465














NET INTEREST MARGIN RECONCILIATION









  Yield on average loans (3)

5.23%

5.07%

5.24%

5.15%

5.31%

  Yield on average securities(4)

2.54%

2.66%

2.52%

2.59%

2.52%

    Yield on average earning assets(4)

4.59%

4.52%

4.59%

4.54%

4.62%











  Rate on average interest-bearing core deposits

0.26%

0.26%

0.25%

0.26%

0.27%

  Rate on average interest-bearing non-core deposits

1.29%

1.19%

1.58%

1.36%

1.43%

    Rate on average interest-bearing deposits

0.37%

0.32%

0.34%

0.34%

0.36%











  Rate on average borrowings

2.23%

1.06%

1.23%

1.71%

1.23%

    Cost of interest-bearing funds

0.61%

0.41%

0.41%

0.48%

0.44%











    Interest rate spread(4)

3.98%

4.11%

4.17%

4.06%

4.18%











       Net interest margin- fully tax equivalent yield(4)

4.22%

4.27%

4.32%

4.25%

4.34%











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

0.16%

0.03%

0.13%

0.11%

0.14%

(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 $340, $231, and $152 for the three months ended September 30, 2016, June 30, 2016, and September 30, 2015, respectively, and $776 and $478 for the nine months ended September 30, 2016 and 2015, 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 $323, $262 and $173 for the three months ended September 30, 2016, June 30, 2016, and September 30, 2015 , respectively, and $844 and $415 for the nine months ended September 30, 2016 and 2015, respectively.  The tax equivalent yield adjustment to interest earned on tax exempt securities was $260, $256 and $264 for the three months ended September 30, 2016, June 30, 2016, and September 30, 2015 , respectively, and $773 and $803 for the nine months ended September 30, 2016 and 2015, respectively.

(5)During the three months ended September 30, 2016, June 30, 2016, and September 30, 2015, accretion of the fair  value adjustment on acquired loans contributed to interest income  was $877, $156, and $616, respectively, and $1,442 and $1,620 for the nine months ended September 30, 2016 and 2015, respectively.  

 

PACIFIC CONTINENTAL CORPORATION and subsidiary



Nonperforming Assets, Asset Quality Ratios and Allowance for Loan Losses



(Dollars in thousands)



(Unaudited)



























September 30,

June 30,

September 30,











2016

2016

2015







NONPERFORMING ASSETS









Non-accrual loans










Real estate secured loans:











Permanent loans:












Multi-family residential

$                      -

$             -

$                      -







Residential 1-4 family

1,465

408

569







Owner-occupied commercial

1,634

1,662

2,371







Nonowner-occupied commercial

3,475

727

829








Total permanent real estate loans

6,574

2,797

3,769






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

6,574

2,797

3,822





Commercial loans

5,619

1,501

983










Total nonaccrual loans

12,193

4,298

4,805




90-days past due and accruing interest

-

-

-





Total nonperforming loans

12,193

4,298

4,805






Nonperforming loans guaranteed by government

(2,427)

(2,667)

(2,574)







Net nonperforming loans

9,766

1,631

2,231




Other real estate owned

13,066

12,108

11,854







Total nonperforming assets, net of guaranteed loans

$           22,832

$ 13,739

$           14,085
























ASSET QUALITY RATIOS










Allowance for loan losses as a percentage of total loans outstanding

 

1.14%

1.29%

 

1.23%





Allowance for loan losses as a percentage of total nonperforming loans, net of government guarantees

210.23%

1172.72%

744.60%





Quarter-to-date net loan (recoveries), charge offs, as a percentage of average loans, annualized










-0.01%

0.12%

0.00%





Net nonperforming loans as a percentage of total loans

0.54%

0.11%

0.16%





Nonperforming assets as a percentage of total assets

0.90%

0.68%

0.75%





Consolidated classified asset ratio(1)

23.80%

20.81%

25.14%





Past due as a percentage of total loans(2)

0.01%

0.02%

0.14%




























Three months ended

Nine months ended







September 30,

June 30,

September 30,

September 30,

September 30,







2016

2016

2015

2016

2015



ALLOWANCE FOR LOAN LOSSES









Balance at beginning of period

$           19,127

$ 17,596

$           16,013

$         17,301

$         15,637

Provision for loan losses

1,380

1,950

625

3,575

1,175

Loan charge-offs

(44)

(668)

(105)

(712)

(631)

Loan recoveries

68

249

79

367

431

Net (charge-offs) recoveries 

24

(419)

(26)

(345)

(200)

Balance at end of period

$           20,531

$ 19,127

$           16,612

$         20,531

$         16,612

(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 and subsidiary

Consolidated Financial Highlights

(Dollars in thousands, except share and per share data)

(Unaudited)







3rd Quarter

2nd Quarter

1st Quarter

4th Quarter

3rd Quarter

2016

2016

2016

2015

2015

EARNINGS




Net interest income

$        20,771

$        19,147

$        18,809

$        18,822

$        18,308

Provision for loan loss

$          1,380

$          1,950

$             245

$             520

$             625

Noninterest income

$          1,919

$          1,747

$          1,807

$          2,008

$          1,714

Noninterest expense

$        13,825

$        14,932

$        12,007

$        11,706

$        11,182

Net income

$          4,851

$          2,606

$          5,459

$          5,528

$          5,325

Basic earnings per share

$            0.24

$            0.13

$            0.28

$            0.28

$            0.27

Diluted earnings per share

$            0.23

$            0.13

$            0.28

$            0.28

$            0.27

Average shares outstanding

20,511,392

19,697,314

19,607,106

19,598,484

19,591,666

Average diluted shares outstanding

20,676,964

19,868,967

19,782,282

19,766,098

19,816,770






PERFORMANCE RATIOS




Return on average assets

0.89%

0.53%

1.12%

1.16%

1.14%

Return on average equity (book)

8.05%

4.67%

9.92%

10.10%

9.91%

Return on average equity (tangible) (1)

10.14%

5.80%

12.35%

12.60%

12.42%

Net interest margin - fully tax equivalent yield (2)

4.22%

4.27%

4.27%

4.35%

4.31%

Efficiency ratio (tax equivalent) (3)

60.24%

70.60%

57.52%

55.50%

55.12%

Full-time equivalent employees

366

333

339

322

321






CAPITAL




Tier 1 leverage ratio

10.33%

9.62%

9.75%

9.93%

9.88%

Common Equity tier 1 ratio

9.43%

10.07%

10.88%

10.97%

11.00%

Tier 1 risk based ratio

9.99%

10.52%

11.37%

11.47%

11.49%

Total risk based ratio

12.55%

13.54%

12.46%

12.58%

12.58%

Book value per share

$          12.23

$          11.48

$          11.46

$          11.15

$          11.06

Regular cash dividend per share

$            0.11

$            0.11

$            0.11

$            0.11

$            0.11






ASSET QUALITY




Allowance for loan losses (ALL)

$        20,531

$        19,127

$        17,596

$        17,301

$        16,612

Non performing loans (NPLs) net of government guarantees

$          9,766

$          1,631

$          2,642

$          2,719

$          2,231

Non performing assets (NPAs) net of government guarantees

$        22,832

$        13,739

$        14,389

$        14,466

$        14,085

Net loan (recoveries) charge offs 

$             (24)

$             419

$             (50)

$           (169)

$               26

ALL as a percentage of gross loans

1.14%

1.29%

1.23%

1.23%

1.23%

ALL as a % NPLs, net of government guarantees

210.23%

1172.72%

666.01%

636.30%

744.60%

Net loan charge offs (recoveries) to average loans

-0.01%

0.12%

-0.01%

-0.02%

0.00%

Net NPLs as a percentage of total loans

0.54%

0.11%

0.18%

0.19%

0.16%

Nonperforming assets as a percentage of total assets

0.90%

0.68%

0.73%

0.76%

0.75%

Consolidated classified asset ratio(4)

23.80%

20.81%

20.96%

23.03%

25.14%

Past due as a percentage of total loans(5)

0.01%

0.02%

0.07%

0.03%

0.14%






END OF PERIOD BALANCES




Total securities and short term deposits

$     553,761

$     414,381

$     413,273

$     379,454

$     398,366

Total loans net of allowance

$  1,786,205

$  1,465,025

$  1,412,138

$  1,387,181

$  1,339,195

Total earning assets

$  2,344,609

$  1,887,757

$  1,828,922

$  1,771,843

$  1,744,329

Total assets

$  2,539,060

$  2,025,410

$  1,965,705

$  1,909,478

$  1,878,283

Total non-interest bearing deposits

$     901,290

$     624,146

$     675,296

$     568,688

$     544,009

Core deposits(6)

$  2,049,352

$  1,508,019

$  1,633,941

$  1,533,942

$  1,465,547

Total deposits

$  2,162,633

$  1,600,132

$  1,696,588

$  1,597,093

$  1,524,954






AVERAGE BALANCES




Total securities and short term deposits

$     456,871

$     408,378

$     417,439

$     401,870

$     406,579

Total loans net of allowance

$  1,558,018

$  1,444,956

$  1,403,115

$  1,357,461

$  1,319,622

Total earning assets

$  2,014,889

$  1,853,334

$  1,820,554

$  1,759,331

$  1,725,398

Total assets

$  2,163,987

$  1,988,985

$  1,956,412

$  1,893,262

$  1,859,418

Total non-interest bearing deposits

$     687,803

$     637,987

$     617,672

$     584,445

$     538,768

Core deposits(6)

$  1,648,777

$  1,559,206

$  1,606,548

$  1,526,805

$  1,482,984

Total deposits

$  1,756,530

$  1,627,742

$  1,670,231

$  1,586,791

$  1,545,465




(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-results-300351930.html

SOURCE Pacific Continental Corporation

Copyright 2016 PR Newswire

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