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Pacific Commerce Bank Reports 2013 Financial Results, Net Income of $4.9 Million and Continued Loan and Core Deposit Growth

LOS ANGELES, CA -- (Marketwired) -- 01/23/14 -- Pacific Commerce Bank (OTCQB: PFCI) today reported financial results for the fourth quarter and the twelve months ended December 31, 2013 that reflected annual net income after tax of $4.9 million along with another solid quarter of loan and core deposit growth.

For the full year ended December 31, 2013, net income was $4,925,000 or $1.10 per share, which compares to net income of $909,000 or $0.20 per share in 2012. After recovery of the Bank's $4.3 million deferred tax asset valuation allowance in the third quarter of 2013, taxes of $390,000 were recorded in the fourth quarter.

Net income before taxes for the fourth quarter of 2013 was $125,000 or $0.03 per share, which compares to net income before tax of $274,000 or $0.06 per share for the same quarter last year. 2013 fourth quarter net income before tax reflected several one-time income and expense items, including expenses relating to sale of one OREO property and write down of the Bank's other OREO property totaling $448,000, offset by a gain on sale of one of two OREO properties in the amount of $487,000. Other one-time expenses included charges related to conversion to a fully-hosted network environment and stock option expenses. Finally, in the fourth quarter of 2012, the Bank recognized a one-time gain on sale of securities in the amount of $195,000, which was not repeated in 2013.

Asset quality stabilized in 2013 with a $3.2 million reduction in non-performing loans, leaving only $264,000 in remaining non-accrual loans, and resulting in a ratio of NPL's to total loans of 0.18% versus 3.01% last year at this time. Non-performing assets were reduced to 0.29% of total assets versus 3.90% a year ago as a result of the sale of two of three OREO properties and the aforementioned reduction in non-performing loans. Total classified assets reduced to only $529,000 at year-end 2013 versus $10.0 million at year-end 2012, resulting in a ratio of total classified assets to tier 1 capital plus loan loss reserves of 1.69% versus 38.13% a year ago.

Total assets increased 11.1% to $173.1 million, an increase of $17.3 million over 2012 levels. The loan portfolio grew $29.9 million for the year, or 26% with growth of $10.6 million in the fourth quarter of 2013. Strong core deposit growth of $18.3 million, a 25% increase year-over-year, contributed to a reduction of the Bank's overall cost of funds to 0.30% from 0.37% and an increase in net interest margin to 3.99% in 2013 from 3.89% in 2012.

CEO Scott R. Andrews commented, "2013 was a landmark year for Pacific Commerce Bank. In addition to solid balance sheet and core earnings growth, the recapture of our deferred tax asset valuation allowance was a significant event which exemplifies the financial turnaround of the Bank. Additionally, our full release from the Regulatory Orders PCB had been operating under for the past two years clears the path for the Bank to execute upon our strategic plan of growth via mergers and acquisitions throughout the Southern California marketplace."

Andrews further commented, "The opening of our full-service branch in San Diego County in December illustrates our commitment to organic growth and expansion in support of our merger growth strategy. Our SBA Department, located in San Diego, brings the opportunity for non-interest income and new and expanded customer relationships in that new market." Pacific Commerce Bank also has branch locations in Downtown and West Los Angeles.

Chairman Thomas Iino commented, "The Board of Directors is very pleased with what Pacific Commerce Bank accomplished in 2013, achieving every major objective set forth by the Board at the beginning of the year. Our attention is now singularly focused on providing meaningful shareholder returns utilizing the Bank's strong capital base, talented and committed Board and management team, and the tremendous market opportunity for mergers and acquisitions here in Southern California in 2014."

Pacific Commerce Bank is well capitalized and poised for future growth opportunities. The Bank's regulatory capital ratios as of December 31, 2013 are as follows:

Tier 1 Leverage Ratio: 14.06%
Tier 1 Risk-Based Capital Ratio: 15.67%
Total Risk-Based Capital Ratio: 16.95%

Selected financial highlights as of December 31, 2013:

  • Total assets were $173.2 million compared to $155.9 million a year ago, an increase of 11.1%
  • Total loans were $146.3 million compared to $116.5 million a year ago, a 25.6% year-over-year growth
  • Total deposits were $145.5 million compared to $133.2 million a year ago with increase in core deposits of $18.3 million
  • Non-accrual loans were $264 thousand compared to $3.5 million a year ago, a reduction of $3.2 million or 92.4%
  • Allowance for Loan Losses to Total Loans was 3.42% versus 4.04%, a year ago
  • Net interest margin for the fourth quarter was 3.83% compared 3.92% for the same quarter a year ago
  • Year-to-date net interest margin was 3.99%, an improvement of ten basis points compared to the same period a year ago
  • QTD average cost of funds was 0.30% versus 0.37% for the same period 2012
  • YTD average cost of funds was 0.33% versus 0.41% for the same period 2012

About Pacific Commerce Bank
Established in 2002, Pacific Commerce Bank is a business-oriented community bank with offices in downtown Los Angeles, West Los Angeles, and San Diego. Founded by local business owners and professionals, the Bank is focused on meeting the diverse financial needs of its clients, and offers a full range of loan, deposit and treasury management products. Information about the Bank can be obtained on its website: www.pacificcommercebank.com

Forward Looking Information
The financial information in this press release is based on unaudited financial results. Certain statements in this press release are "forward-looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements are subject to risks and uncertainties and therefore the bank's actual results may differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that the bank is subject to include, but are not limited to, risks related to the local and national economy, including fluctuations in interest rates and costs and changes in economic policy; the ability of the bank to perform in accordance with its plans; competition; regulatory matters; demand for loan products; deposit flows; its ability to develop and implement new technologies; and other factors. The bank cautions readers not to place undue reliance on any forward-looking statements. The bank does not undertake, and specifically disclaims any obligation, to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Pacific Commerce Bank
                 Selected Financial Data - Unaudited ('000)

BALANCE SHEET                                       12/31/2013   12/31/2012
                                                   -----------  -----------
                                      Total Assets $   173,154  $   155,886
                                 Total Investments $     1,219  $    15,426
                                       Gross Loans $   146,303  $   116,463
                         Allowance for Loan Losses $    (5,006) $    (4,704)
                           Other Real Estate Owned $       244  $     2,581
                                    Total Deposits $   145,516  $   133,151
                                  Total Borrowings $         0  $         0
                        Total Stockholders' Equity $    26,204  $    21,485
                     Net (Recoveries)/ Charge-offs $      (303) $     1,273
                           Total Non-Accrual Loans $       264  $     3,498
                                ALLL / Total Loans        3.42%        4.04%
                          ALLL / Non-Accrual Loans        1894%         135%

                                                     For the Three Months
                                                      Ended December 31,
STATEMENT OF OPERATIONS                               2013          2012
                            Total Interest Income $      1,655  $      1,676
                           Total Interest Expense          107           128
                                                  ------------  ------------
                              Net Interest Income        1,548         1,548
                              Non-Interest Income          775           383
                                                  ------------  ------------
                                     Total Income        2,323         1,931
                             Non-Interest Expense        2,154         1,674
                                                  ------------  ------------
 Income Before Loan Loss Provision, Stock Options
                          and Income Tax Expenses          169           284
                                                  ------------  ------------
                        Provision for Loan Losses            0             0
                             Stock Option Expense           45            10
                               Income Tax Expense          390             0
                                                  ------------  ------------
                                       Net Income $       (266) $        274
                                                  ============  ============
                                              EPS $      (0.06) $       0.06

                                                     For the Twelve Months
                                                      Ended December 31,
STATEMENT OF OPERATIONS                               2013          2012
                            Total Interest Income $      6,654  $      6,744
                           Total Interest Expense          456           583
                                                  ------------  ------------
                              Net Interest Income        6,208         6,161
                              Non-Interest Income        1,841         1,299
                                                  ------------  ------------
                                     Total Income        8,049         7,460
                             Non-Interest Expense        6,952         6,528
                                                  ------------  ------------
 Income Before Loan Loss Provision, Stock Options
                          and Income Tax Expenses        1,097           932
                                                  ------------  ------------
                        Provision for Loan Losses            0             0
                             Stock Option Expense           66            23
                               Income Tax Expense       (3,895)            0
                                                  ------------  ------------
                                       Net Income $      4,926  $        909
                                                  ============  ============
                                              EPS $       1.10  $       0.20

For more information, contact:
Pacific Commerce Bank
Richard Koh
Chief Financial Officer

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