SAN DIEGO, Jan. 20 /PRNewswire/ -- Bank of Commerce (Nasdaq: BCOM) today
reported record fourth quarter and full year profits for 1997. The bank's
fourth quarter profits more than doubled to $2.4 million, or $.19 per share,
compared to $1.0 million, or $.09 per share, in the fourth quarter a year ago.
For all of 1997, the Bank's profits increased 101% to a record $7.0 million,
or $.56 per share, compared to $3.5 million, or $.32 per share, in 1996. Per
share results reflect the 5-for-2 stock split paid May 5, 1997 and the 2-for-1
stock split paid December 10, 1997. Bank of Commerce's 1997 return on average
equity was 27.3% for the fourth quarter and 22.4% for the year.
"We closed the year with our fourteenth straight quarter of increased
profits and set another record for profitability in 1997. Fueled by
continuing strong demand for SBA loans, solid customer loyalty and expansion
into new markets with our loan production offices, 1997 was a banner year,"
said Peter Q. Davis, Chairman and Chief Executive Officer. "As the leading
Small Business Administration (SBA) Bank lender for the last three years, we
increased our SBA lending 33% in 1997 to $178 million. Our present backlog of
loan applications continues at record levels due to the excellent service and
marketing performance of our twelve loan offices in California, Arizona,
Nevada, Colorado, Washington and Oregon."
SBA loans contributed to increased profitability in two ways during 1997.
The loans held in the Bank's portfolio contributed to a 42% increase in net
interest income to $24.2 million for the full year. In addition, the Bank
resumed selectively selling loans in the second half of the year increasing
non-interest income 79% to $9.7 million from $5.4 million in 1996.
Total assets increased 48% to $557 million at December 31, 1997 compared
to $376 million one year earlier. Net loans increased 33.4% to $385 million
from $288 million one year earlier. Over half of the total loan portfolio is
comprised of SBA guaranteed loans, which totaled $197 million at year end
compared to $133 million at the end of 1996. At December 31, 1997, the fair
value of the bank's SBA portfolio exceeded the book carrying value by
approximately $30.4 million (pre-tax) or $1.57 per share (after tax). Under
Generally Accepted Accounting Principals (GAAP), the Bank's SBA loan portfolio
is carried on its balance sheet at amortized cost. The fair value of the
portfolio, based on representative market prices, is currently higher than the
book carrying value. When the bank sells SBA loans, it recognizes the
premiums (or discounts) as non-interest income (or expense) at that time.
The increase in loans was primarily funded through deposit growth in 1997.
Deposits increased 48% to $512 million at the end of 1997 from $345 million at
the end of 1996. "We believe our long-standing relationship in our local
communities will continue to help us attract deposits and provide a solid base
to continue building our relationship banking business," stated Davis.
For the fourth quarter, the bank's net interest income increased 37% to
$6.8 million compared to $4.9 million in the like quarter a year ago. Net
interest margin, a basic measure of a bank's profitability, was 5.82% in 1997
compared to 6.16% in 1996 and was 5.56% in the fourth quarter compared to
6.10% in the fourth quarter a year ago. "Our cost of funds for 1997 increased
to 4.79%, compared with 4.46% a year ago," Davis continued.
Non-interest income increased to $9.7 million in 1997, compared to
$5.4 million in the like period a year ago. The largest portion of the
increase was generated by gains on loan sales, which increased to $6.0 million
in 1997 from $2.2 million in 1996. In the fourth quarter, the Bank sold $24.8
million of the unguaranteed portion of its SBA loan portfolio. "Sale of
loans, both guaranteed and unguaranteed, are an on-going part of our strategy
to augment capital, generate profits and build shareholder value. The sale of
the unguaranteed portion, in addition to contributing to profitability this
year, also improved asset quality and reduced our need to add to reserves in
the fourth quarter. At December 31, 1997, the portion of guaranteed loans in
the total loan portfolio was 51% compared to 46% at December 31, 1996.
"We have successfully improved our efficiency ratio to 65.4% for the
fourth quarter and 64.4% for the year compared to 70.6% and 71.3% for the like
periods a year ago. Operating (non interest) expense grew more slowly than
income, increasing 34% to $22.2 million in 1997, compared to $16.6 million in
1996," said Davis.
Bank of Commerce's portfolio of SBA loans serviced for other investors
totaled $233 million at December 31, 1997, as compared to $204 million a year
ago. Loans serviced for other investors generated $394,000 in net fee income
in the fourth quarter and $1.6 million for the full year ended
December 31, 1997.
Asset quality remains high, with total non-performing assets of
$3.8 million, or 0.67% of assets, at December 31, 1997 compared to
$3.0 million, or 0.80% a year ago. Total non-performing assets, net of SBA
guaranteed loans, equaled $2.5 million or 0.44% of assets at December 31, 1997
compared to $2.1 million, or 0.56% of assets at December 31, 1996.
Shareholder equity increased to $37.3 million and book value, excluding
approximately $1.57 per share (after tax) of unrealized fair value of the
bank's SBA loan portfolio, rose to $3.22 per share at December 31, 1997 from
$2.73 one year earlier. For the year, return on average assets was 1.51% and
return on average equity was 22.4%. For the fourth quarter, ROA was 1.82% and
ROE was 27.3%.
Bank of Commerce is the nation's leading SBA bank lender and the largest
publicly held independent bank headquartered in San Diego County. The bank
operates twelve specially designated loan production offices in San Diego,
Glendale, Orange, Sacramento, and San Francisco, CA; Las Vegas and Reno, NV;
Phoenix and Tucson, AZ; Seattle, WA, Portland, OR, and Denver, CO. In
addition, Bank of Commerce operates seven full service branches in San Diego,
Palm Desert, and Temecula, CA. Friday, January 16, BCOM closed at $19.25 per
share.
NOTE: 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. These factors include
but are not limited to the effect of interest rate changes, changes in SBA
policy or funding, competition in the financial services market for both
deposits and loans, and general economic conditions.
This company is a client of Len Cereghino & Co. Corporate Investor
Relations. Bank of Commerce's press releases are available at no charge
through PR Newswire's Company News On-Call fax service. For a menu of the
Bank of Commerce press releases or to retrieve a specific release, call
800-IRNEWS9, extension 123798, or
http://www.prnewswire.com/cnoc/exec/menu?123798 on the Internet.
FINANCIAL HIGHLIGHTS
(unaudited) (in thousands except per share)
Year Ended December 31,
1997 1996 % change
Interest Income $41,728 $28,573 46.0%
Interest Expense $17,112 $10,824 58.1%
Provision for Credit Losses $ 387 $ 667 -42.0%
Net Interest Income after
provision for credit losses $24,229 $17,082 41.8%
Non-Interest Income $ 9,724 $ 5,428 79.1%
Non-Interest Expense $22,195 $16,567 34.0%
Income Tax $ 4,710 $ 2,437 93.3%
Net Income $ 7,048 $ 3,506 101.0%
"Basic" Earnings Per Share $ 0.66 $ 0.40 65.0%
Fully Diluted Earnings Per Share $ 0.56 $ 0.32 75.0%
Basic" Average Shares Outstanding 10,750 7,756 38.6%
Fully Diluted Average Shares Outstanding 12,584 11,014 14.3%
Cash Dividend per Common Share $ 0.093 $ 0.066 40.9%
Quarter Ended December 31,
1997 1996 % change
Interest Income $11,656 $ 8,114 43.7%
Interest Expense $ 4,886 $ 3,127 56.3%
Provision for Credit Losses $ 0 $ 40
Net Interest Income after
provision for credit losses $ 6,770 $ 4,947 36.9%
Non-Interest Income $ 4,725 $ 1,196 295.1%
Non-Interest Expense $ 7,514 $ 4,398 70.9%
Income Tax $ 1,561 $ 718 117.4%
Net Income $ 2,420 $ 1,027 135.6%
"Basic" Earnings Per Share $ 0.21 $ 0.12 75.0%
Fully Diluted Earnings Per Share $ 0.19 $ 0.09 111.1%
Basic" Average Shares Outstanding 11,485 8,762 31.1%
Fully Diluted Average Shares Outstanding 13,046 11,323 15.2%
Cash Dividend per Common Share $ 0.030 $ 0.018 66.7%
12/31/97 12/31/96 % Change
Total Assets $556,772 $375,920 48.11%
Loans Receivable, net $384,426 $288,204 33.39%
Investment Securities $ 30,160 $ 8,806 242.49%
Deposits $512,120 $345,238 48.34%
Shareholders' Equity $ 37,259 $ 27,377 36.10%
Book Value Per Common Share $ 3.22 $ 2.73 17.95%
FINANCIAL RATIOS: 12/31/97 12/31/96
Return on average assets 1.51% 1.08%
Return on average equity 22.41% 13.63%
Average equity to average assets 6.74% 7.93%
Efficiency ratio 64.43% 71.26%
Operating expenses to average assets 4.74% 5.08%
Net interest margin (ytd) 5.82% 6.16%
LOAN SERVICING PORTFOLIO: 12/31/97 12/31/96 % Change
Balance at end of quarter $233,320 $203,696 14.54%
Balance at beginning of year $203,696 $196,663 3.58%
Fee income generated during quarter $ 394 $ 239 64.85%
Fee income generated year to date $ 1,559 $ 1,375 13.38%
NONPERFORMING ASSETS: 12/31/97 12/31/96 % Change
Accruing loans - 90 days past due $ 153 $ 318 -51.89%
Non-accrual loans $ 1,187 $ 1,143 3.85%
Restructured loans $ 550 $ 0
Total nonperforming loans $ 1,890 $ 1,461 29.36%
Other real estate owned $ 574 $ 656 -12.50%
Total nonperforming assets (A) $ 2,464 $ 2,117 16.39%
Total nonperforming assets to total assets 0.44% 0.56%
SBA guaranteed portions excluded $ 1,291 $ 896
ALLOWANCE FOR CREDIT LOSS 12/31/97 12/31/96 % Change
Balance beginning period $2,279 $2,007 13.55%
Provision for credit losses $ 387 $ 667 -41.98%
Net chargeoffs (recoveries) $ 512 $ 395 29.62%
Balance end of period $2,154 $2,279 -5.48%
Allowance to net loans (ex. SBA guarantees) 1.15% 01.46%
Allowance to nonperforming loans
(ex. SBA guarantees) 114% 156%
(A) Non-performing assets exclude SBA Guaranteed portion of $1,291 at
December 31, 1997, and $896 million at December 31, 1996.
SOURCE Bank of Commerce
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CONTACT:
Peter Q. Davis, Chairman & CEO of Bank of
Commerce, 619-232-2096
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