SAN DIEGO, Oct. 8 /PRNewswire/ -- Bank of Commerce (Nasdaq: BCOM) today
reported its third quarter net income increased 54% to $3.8 million, or
$.24 per diluted share, compared to $2.45 million, or $.16 per diluted share,
in the third quarter of 1997. The strong earnings produced a return on
average assets of 2.11% and return on average equity of 27.5% for the third
quarter.
Continuing brisk demand for small business loans boosted loan production
15.4% to $169 million year-to-date. Net income for the nine months ended
September 30, 1998 increased 65% to $9.2 million, or $.59 per share, compared
to $5.6 million or $.38 per share. All per share results reflect the pooling
transaction for the Rancho Vista National Bank merger and the 2-for-1 split on
BCOM common shares paid December 10, 1997.
"To retain our position as one of the nation's largest SBA lenders, we
have to offer fast turnaround on loan applications and attentive service
throughout the life of the loan. We feel we do this better than anyone else.
As a result, we have developed solid relationships with our small business
loan referral sources and continue to attract increased business at record
rates in both existing and new markets," stated Peter Q. Davis, Chairman and
CEO. "Most frequently, we originate commercial real-estate loans to owner
occupants which range from $100,000 up to $1.5 million. In helping successful
business owners with the purchase of the buildings in which to grow their
business, we are proud to have assisted them in reaching their goals and
achieving their dreams." Third quarter SBA loan production increased 17.1% to
$63.7 million and year-to-date 15.4% to $169 million.
"We intend to concentrate on increasing loan production through the
opening of additional loan production offices (LPOs) across the country. In
September we opened a loan production office in Salt Lake City under the name
of Commerce Loan Company, which will service SBA loans throughout the state of
Utah. The four new LPOs we opened in Texas during the second quarter of this
year are performing above our initial expectations. Further, we continue to
implement plans to open additional LPOs. Atlanta will open mid-October, with
Chicago and Boise slated to open prior to year end," Davis said.
Net interest income after loan loss provision, the basic measure of a
bank's profitability, increased 19% to $9.4 million in the third quarter of
1998 from $7.9 million one year ago. For the first nine months of 1998, the
bank's net interest income increased 23% to $26.6 million compared to
$21.7 million one year earlier. Net interest margin was 5.72% in the third
quarter compared to 5.85% in the like quarter a year ago.
Non-interest income more than doubled to $5.6 million in the third quarter
compared to $2.7 million in the like quarter of 1997. Bank of Commerce sold
$50 million in SBA guaranty loans generating a gain on sale of $4.5 million in
the third quarter. The Bank also brokered $3.7 million in SBA related loans
generating $258,000 in fee income. Year-to-date, non-interest income is up
173% to $14.5 million compared to $5.3 million in the like period a year ago.
In the first nine months of 1998, the Bank sold $109.5 million in SBA loans
for a gain of $10.7 million year-to-date compared to sales of $29.7 million
and a gain of $2.4 million for the first nine months of 1997. Loans serviced
for others generated $161,000 in net fee income in the third quarter and
$1 million in the first nine months of 1998.
"Nationally, money center and super regional banks have been offering SBA
borrowers low rates on conventional loans to refinance seasoned SBA loans. As
a result, prepayment speeds on SBA loans are rising and sale premiums are
contracting slightly. To capture the value in our loan production, we have
stepped up loan sales this year, reducing the growth of our loan portfolio but
increasing income," stated David Bartram, Senior Executive Vice President.
"We expect to continue offsetting portfolio additions from new loan
originations with the sale of more seasoned loans which have higher exposure
to prepay during the remainder of this year. Unlike many participants in the
SBA secondary market, over 75% of our gain on sale are cash premiums, which
are not subject to reversal based on prepayment rates of the sold loans. In
the third quarter of 1998, SBA loans premiums declined slightly to 9.25%
compared to 9.8% in the second quarter and 9.7% in the third quarter of 1997."
"Third quarter operating expenses increased due to a one-time charge of
$600,000 for settlement of a class action lawsuit that had been in process for
several years. Without the one-time charge, our efficiency ratio improved to
53.4% for the quarter compared to 59.2% for the third quarter a year ago,"
Davis said. Operating (non interest) expense was $25.3 million in the nine
months ended September 30, 1998, compared to $17.7 million a year ago.
Total assets increased 13.7% to $697.4 million from $613.6 million at
September 30, 1997. Deposits increased 12.6% to $633.5 million from
$562.7 million a year ago. At September 30, 1998, net loans were
$482.4 million, of which $184.6 million or 38% were SBA guaranteed. These SBA
loans are reflected on the Bank's balance sheet at a discount to fair market
value. Bank of Commerce's portfolio of SBA loans serviced for others totaled
$305.9 million at September 30, 1998, compared to $214.3 million a year ago.
Asset quality remains high, with non-performing assets totaling
$4.2 million, or 0.60% of assets at September 30, 1998 compared to
$3.8 million, or 0.62% a year ago. Total non-performing assets, net of SBA
guaranteed loans, equaled $3.1 million, or 0.45% of assets at
September 30, 1998. Shareholder equity increased to $57.2 million and
tangible book value, excluding approximately $30 million of estimated fair
value of the bank's SBA loan portfolio at December 31, 1997, rose to $3.94 per
share at September 30, 1998.
Bank of Commerce operates 18 loan offices in California, Arizona, Nevada,
Oregon, Washington, Colorado, Texas, and now Utah. Additional loan offices
are planned for opening later this year in Boise, Atlanta and Chicago. Bank
of Commerce has been a SBA lender for 23 years and was among the first banks
to participate with the SBA, which will facilitate the lending of
approximately $9 billion to finance small business expansion this year. On
Wednesday, October 7, Bank of Commerce shares closed the trading day at
$10.88.
Statements concerning future performance, developments or events,
concerning expectations for growth and market forecasts, and any other
guidance on future periods, constitute forward-looking statements which are
subject to a number of risks and uncertainties which might cause actual
results to differ materially from stated expectations.
FINANCIAL HIGHLIGHTS
INCOME STATEMENT
(unaudited) Third Quarter Nine Months
(in thousands except per share) Ended September 30, Ended September 30,
1998 1997 1998 1997
Interest Income $15,096 $13,606 $43,983 $36,955
Interest Expense 5,718 5,468 17,320 14,779
Provision for Loan Losses 0 277 60 456
Net Interest Income
after Provision 9,378 7,861 26,603 21,720
Gain on Sale of SBA Loans 4,530 1,680 10,691 2,387
Other Non-Interest Income 1,093 1,032 3,842 2,937
Non-Interest Expense 8,600 6,469 25,321 17,748
Income Tax 2,636 1,656 6,647 3,741
Net Income $3,765 $2,448 $9,168 $5,555
Basic Earnings Per Share $ 0.26 $ 0.18 $0.64 $0.43
Diluted Earnings Per Share $ 0.24 $ 0.16 $0.59 $0.38
Basic Average Shares
Outstanding 14,471 13,764 14,364 13,023
Diluted Average Shares
Outstanding 15,628 15,245 15,657 14,771
Cash Dividend per common
share $0.030 $0.025 $0.090 $0.063
BALANCE SHEET Sept. 30, Dec. 31, Sept. 30,
1998 1997 1997
Total Assets $697,359 $ 679,556 $613,626
Loans
SBA Guaranteed Loans 184,587 197,998 182,677
SBA Unguaranteed Loans 166,867 156,050 170,015
Total SBA Loans 351,454 354,048 352,692
Loans Receivable, gross 485,294 476,631 477,021
Allowance for loan loss (2,948) (2,958) (2,954)
Loans Receivable, net 482,346 473,673 474,067
Investment Securities 49,477 51,749 40,590
Deposits 633,485 624,381 562,661
Shareholders' Equity 57,166 46,914 43,427
Book Value Per Common Share $3.94 $3.32 $3.14
LOAN SERVICING PORTFOLIO Sept. 30, 1998 Sept. 30, 1997
Balance at end of quarter $305,920 $214,328
Balance at beginning of year $236,326 $203,696
Fee income generated during quarter $161 $384
Fee income generated year to date $1,007 $1,172
LOAN ORIGINATIONS Quarter ended Nine Months ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
SBA loan production $63,658 $54,368 $169,045 $146,594
Other loan production $25,953 $20,437 $94,972 $66,314
Total loan production $89,611 $74,805 $264,017 $212,908
FINANCIAL RATIOS Quarter ended Nine Months ended
(annualized) Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
Return on average assets 2.11% 1.63% 1.75% 1.33%
Return on average equity 27.50% 23.36% 23.73% 19.15%
Efficiency ratio 57.45% 59.19% 61.43% 64.10%
Operating expenses to
average assets 4.83% 4.26% 4.83% 4.23%
Net interest margin 5.72% 5.85% 5.60% 5.83%
Average equity to average
assets 7.67% 6.96% 7.37% 6.96%
NONPERFORMING ASSETS Sept. 30, Dec. 31, Sept. 30,
1998 1997 1997
Accruing loans - 90 days
past due $3 $155 $ 248
Non-accrual loans 1,609 1,772 1499
Restructured loans 79 550 606
Total nonperforming loans 1,691 2,477 2,353
Other real estate owned 1,447 864 899
Total nonperforming assets (A) $3,138 $3,341 $3,252
Total nonperforming
assets to total assets 0.45% 0.49% 0.53%
ALLOWANCE FOR LOAN LOSS
Balance at beginning of period $2,958 $2,976
Provision for credit losses 60 456
Net chargeoffs (recoveries) 70 478
Balance at end of period $2,948 $2,954
Allowance to net loans
exc. SBA guar. 0.99% 1.07% 1.01%
Allowance to nonperforming
loans exc. SBA guar. 174.30% 119.40% 125.50%
(A) SBA Guaranteed loan portion of nonperforming assets was $1,071,000 at
September 30, 1998, $1,291,000 at December 31, 1997 and $523,000 at
September 30, 1997.
Note to First Call Subscribers: Bank of Commerce will host an analyst
conference call at 1:45 PDT (4:45 EDT). To participate, dial in 5 to 10
minutes prior to the call at 415-904-7321 and request the Bank of Commerce
Conference Call.
SOURCE Bank of Commerce
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http://www.bankofcommerce.net
Company News On-Call:
http://www.prnewswire.com/comp/123798.html or fax,
800-758-5804, ext. 123798
CONTACT:
Peter Q. Davis, Chairman & CEO of Bank of
Commerce, 619-232-2096
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