SAN DIEGO, July 7 /PRNewswire/ -- Bank of Commerce (Nasdaq: BCOM) today
reported continuing strong demand for small business loans helped produce a
93% increase in second quarter net income. In addition, assets grew 23%,
deposits increased 22% and the Bank's loan portfolio grew 11% above year ago
levels.
Net income was $3.3 million, or $.21 per share (diluted), in the second
quarter ended June 30, 1998 compared to $1.7 million, or $.12 per share
(diluted), in the like quarter a year ago. Net income for the first half of
1998 increased 75% to $5.4 million, or $.34 per share (diluted), compared to
$3.1 million, or $.22 per share (diluted), in the first half of 1997. Results
for all periods reflect the consolidated income statement and balance sheet of
Rancho Vista National Bank (RVNB), which was acquired on May 15, 1998 in a
pooling transaction. Per share results also reflect the 2.5 million shares
issued in conjunction with the RVNB acquisition, a 5-for-2 split on
May 5, 1997 and a 2-for-1 split on December 10, 1997.
"Our strategy to build a first-class financial institution continues to
generate superior results in the second quarter," said Peter Q. Davis,
Chairman and Chief Executive Officer. "Highlights for the second quarter
include the completion of our acquisition of Rancho Vista National Bank and
our entry into the Texas market with four new loan production offices.
Year-to-date, we are delighted to report a 74% increase in net income and a
55% increase in earnings per share (diluted), particularly in light of the
non-recurring acquisition expenses and the increase in shares outstanding.
"We believe the Rancho Vista acquisition was a perfect fit in terms of
branch locations and lending expertise, but was unique. We continue to
believe generating growth internally through geographic expansion is a better
approach than pursuing acquisitions going forward. At this time, we will
operate under the assumption that no further capital will be raised through
future stock offerings nor do we anticipate adding capital through
acquisitions.
"Our expansion eastward is going extremely well with the opening of new
loan production offices in Dallas-Fort Worth, Houston, San Antonio and
Austin," Davis continued. "We are excited about the opportunities in the
Texas market and have recruited a top team of experienced SBA business
development officers to launch our operations. These very seasoned
individuals produced over $60 million in SBA loans last year, which totaled
more than 34% of our system-wide production in 1997. We are also in the
process of establishing new offices in Atlanta, Chicago, Salt Lake City,
Boise, Idaho, Spokane, Washington, and Fresno, California. We believe our
expertise in SBA lending and our ability to understand the needs of small and
mid-size business customers can be leveraged on a national level to continue
maximizing value for our shareholders. We feel value is increased from
(1) the interest income produced from our growing loan portfolio, (2) the
profit generated for the sale of loans, (3) the premium market value which
these loans carry that is not reflected in book value, and (4) efficient cost
control."
Bank of Commerce is the nation's leading bank Small Business
Administration Lender (SBA) and a member of the SBA Preferred Lender Program.
In the second quarter, the Bank generated $65.1 million in SBA loans compared
to $46.8 million in the second quarter a year ago. SBA loans accounted for
75% of the Bank's gross loans.
In addition to building its portfolio of loans, Bank of Commerce sold
$13.3 million in guaranteed SBA loans, $16.3 million in unguaranteed loans,
and $6.8 million in brokered SBA-related loans. These brokered loans created
$323,000 in fee income. The sale of the guaranteed and unguaranteed SBA loans
generated a pre-tax gain of $2.9 million. These loan sales equaled 75% of its
SBA loan production in the second quarter. In the second quarter a year ago,
the Bank sold $3.9 million of SBA loans for a pre-tax gain of $340,000.
"Recently, several SBA lenders have reported prepayments on SBA loans have
begun to increase due to a rise in competition for commercial business loans,"
Davis said. "This situation has been caused, in part, by more banks,
including large institutions, pursuing the limited number of good loans in the
market and attempts by these institutions to expand their markets by
aggressively pricing refinancing offers. We have not experienced the same
level of prepaid loans as other banks have reported, but we have not been
immune to this increase.
"The increase in prepayments was one of the reasons we increased loan
sales this year and anticipate higher levels for the balance of the year.
Because Bank of Commerce sells its loans primarily for cash premiums rather
than recording present value of gain on sale, our income exposure due to
prepayments on previously sold loans is low. The increase in sales of SBA
loans this year builds earnings, capital, and liquidity."
The increase in SBA loans contributed to a $48.4 million or 11% increase
in net total loans in the past 12 months. Net loans increased to
$493.2 million at June 30, 1998 from $444.4 million at June 30, 1997. At
December 31, 1997, the Bank disclosed in its financial statements $30 million
of unrealized gains in its loan portfolio, which is not included in book
value. Deposits increased 22% to $658 million from $538 million a year ago.
Total assets increased 23% to $718 million from $586 million at
June 30, 1997. Asset quality remains high, with total non-performing assets
totaling $4.0 million, or 0.55% of assets, at the end of June 1998 compared to
$3.1 million, or 0.53% of assets a year ago. "Our geographic diversification
currently in seven states not only provides excellent opportunities for
expansion, but also offers a degree of insulation from regional economic
fluctuations," stated Davis.
Net interest income after loan loss provision increased 23% to
$8.9 million in the second quarter compared to $7.2 million in the second
quarter of 1997. Net interest margin for the quarter was 5.56% compared to
5.67% in the like quarter a year ago. For the first half of 1998, net
interest income increased 24% to $17.2 million from $13.8 million in the like
period a year ago. Net interest margin for the first half was 5.54% compared
to 5.82% in the like period a year ago.
Loans serviced for others generated $420,000 in net fee income in the
second quarter on a servicing portfolio of $274 million at June 30, 1998. In
the second quarter a year ago, net fee income of $393,000 was generated on a
servicing portfolio of $199 million. Non-interest income (excluding gains on
SBA loan sales) was $2.8 million in the first half 1998, compared to
$1.9 million in the first half a year ago.
Operating (non-interest) expense grew 43.3% in the second quarter to
$8.1 million, compared to $5.7 million in the second quarter a year ago. For
the first half, operating expense increased 48.3% to $16.7 million compared to
$11.3 million in the like period a year ago. "We expensed rather than
capitalized the costs associated with the RVNB acquisition," stated Davis.
"As a result non-interest expense in the first half was approximately
$1.2 million higher due to these non-recurring charges. In addition, twelve
of RVNB's employees chose not to accept our offers to remain with the bank,
which will reduce payroll expense by approximately $350,000 on an annualized
basis. We are continuing to focus on improving our operating efficiencies
through cost control measures while accelerating our income growth through our
expanding national loan production network."
Shareholder equity increased to $53.8 million and book value rose to
$3.73 per share at June 30, 1998. Year to date, the Bank has generated a
return on average assets of 1.56% and a return on average equity of 21.7%.
Average equity to average assets this year is 7.22% compared to 6.97% during
the like period a year ago.
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 16 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; Denver, CO; Dallas-Fort
Worth, Houston, Austin, and San Antonio, TX. In addition, Bank of Commerce
operates ten full service branches in San Diego, Vista, Carlsbad, Temecula,
Palm Desert, and Orange, California.
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 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.
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.
FINANCIAL HIGHLIGHTS
(unaudited) (in thousands except per share)
Second Quarter Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Interest Income $14,734 $12,598 $28,887 $23,350
Interest Expense 5,803 5,201 11,602 9,311
Provision for Loan Losses -- 160 60 179
Net Interest Income
after provision for
loan losses 8,931 7,237 17,225 13,860
Gain on sale of
SBA Loans 2,977 340 6,161 707
Non-Interest Income 1,361 958 2,749 1,904
Non-Interest Expense 8,106 5656 16,722 11,279
Income Tax 1,865 1,160 4,010 2,085
Net Income $3,298 $1,719 $5,403 $3,107
Primary Earnings
Per Share $0.23 $0.14 $ 0.38 $0.25
Fully Diluted Earnings
Per Share $0.21 $0.12 $0.34 $0.22
Primary Average
Shares Outstanding 14,384 12,719 14,309 12,646
Fully Diluted Average
Shares Outstanding 15,705 14,521 15,669 14,378
Cash Dividend
per Common Share $0.03 $0.02 $0.06 $0.038
BALANCE SHEET:
June 30, 1998 Dec. 31, 1997 June 30, 1997
Total Assets $717,902 $679,556 $586,128
Loans Receivable, net 493,241 473,673 444,448
Investment Securities 49,950 51,749 42,065
Deposits 658,348 624,381 537,978
Shareholders' Equity 53,796 46,914 40,736
Book Value Per Common Share $3.73 $3.32 $2.99
LOAN SERVICING PORTFOLIO:
June 30, 1998 June 30, 1997
Balance at end of quarter $274,038 $198,693
Balance at beginning of year $236,326 $203,696
Fee income generated during quarter $420 $393
Fee income generated year to date $846 $787
FINANCIAL RATIOS:
(annualized year-to-date) June 30, 1998 June 30, 1997
Return on average assets 1.56% 1.17%
Return on average equity 21.67% 16.77%
Efficiency ratio 7.22% 6.97%
Operating expenses to average assets 63.71% 67.31%
Net interest margin (ytd) 4.83% 4.21%
Average equity to average assets 5.54% 5.82%
ALLOWANCE FOR LOAN LOSSES:
June 30, 1998 June 30, 1997
Balance beginning of year $2,958 $2,976.00
Provision for loan losses $60 $179.00
Net charge offs (net recoveries) $105 $410.00
Balance end of period $2,913 $2,745.00
Allowance for loan losses
to net loans, excluding-SBA guarantee 1.01% 1.04%
Allowance for loan losses
to nonperforming loans 119.2% 129.9%
NONPERFORMING ASSETS:
June 30, 1998 Dec. 31, 1997 June 31, 1997
Accruing loans
- 90 days past due $60 $155 $106
Non-accrual loans $2,305 $1,772 $1,402
Restructured loans $79 $550 $606
Total nonperforming loans $2,444 $2,477 $2,114
Other real estate owned $1,508 $864 $1,004
Total nonperforming assets (A) $3,952 $3,341 $3,118
Total nonperforming assets
to total assets 0.55% 0.49% 0.53%
(A) SBA Guaranteed loan portion of nonperforming assets was $1.7 million
at June 30, 1998, $1.3 million at December 31, 1997 and $1.3 million at
June 30, 1997.
SOURCE Bank of Commerce
 back to top
Related links:
http://www.bankofcommerce.net
Company News On-Call: http://www.prnewswire.com or
fax, 800-758-5804, ext. 107344
CONTACT:
Peter Q. Davis, Chairman & CEO of Bank of
Commerce, 619-232-2096
|
