SAN DIEGO, Oct. 6 /PRNewswire/ -- Bank of Commerce (Nasdaq: BCOM) today
reported third quarter net income more than doubled to a record $2.08 million
fueled by continuing strong demand for small business loans. Small Business
Administration (SBA) lending increased 36.5%. The strong earnings produced a
return on average assets of 1.71% and return on average equity of 25.2% for
the third quarter.
Third quarter net income increased 118% to $2.08 million, or $.32 per
common equivalent share, compared with $951,000, or $.17 per common equivalent
share, in the like quarter a year ago. All per share results reflect the 5-
for-2 stock split paid May 5, 1997. In addition, the Bank recently announced
a 2-for-1 split on its common shares payable on December 10, 1997 to
shareholders of record November 4, 1997. The stock will begin trading ex-
dividend on December 11. Following the split, Bank of Commerce will have
approximately 11.3 million shares outstanding. Adjusted to the 2-for-1 split,
third quarter earnings adjusted were $.16 per share compared to $.08 per share
in the like quarter a year ago.
"Our record year-over-year growth in income and assets was due to
continued strong demand for SBA loans throughout our service area of the
Western United States. Our strategy to resume sales of a portion of SBA loans
we originate contributed $1.6 million to pre-tax profits in the third
quarter," stated Peter Q. Davis, Chairman and Chief Executive Officer. The
Bank sold $19.5 million of SBA loans from its portfolio during the quarter.
At September 30, 1997 the bank held at face value $180 million of SBA
guaranteed loans, which have a substantially higher market value (as noted in
Footnote 16 of the Bank's Annual Report). At the end of the third quarter a
year ago Bank of Commerce carried at face value $113 million of SBA loans in
its portfolio.
"Our decision to sell a portion of our SBA loans into the secondary market
reflects our need to support the Bank's strong asset growth and our desire to
do it through internal capital generation. Despite the increased sale of SBA
loans, we continue to build our SBA loan portfolio, adding $31.7 million, or
62% of our third quarter loan production, to assets. We believe this strategy
achieves a good balance between generating current income and building a
recurring revenue stream for our portfolio, which will add to our franchise
value," Davis added.
Net income for the nine months ended September 30 increased 87% to $4.6
million, or $.73 per share, compared to $2.5 million or $.44 per share, in the
like period a year ago. Adjusted for the pending 2-for-1 split, nine month
earnings were $.36 per share compared to $.22 per share in the like period of
1996.
Net interest income after loan loss provision, the basic measure of a
bank's profitability, increased 38% to $6.4 million in the third quarter of
1997 from $4.6 million one year ago. For the nine months ended September 30,
1997 the bank's net interest income increased 44% to $17.5 million compared to
$12.1 million one year earlier.
"We continue to work on improving productivity throughout the
organization. Our efficiency ratio improved to 59.1% for the quarter compared
to 71.9% for the third quarter a year ago," Davis said. Non interest expense
was $14.6 million in the nine months ended September 30 1997, compared to
$12.2 million a year ago. Non interest income increased to $4.9 million in
the nine months ended September 30, 1997, compared to $4.2 million in the like
period a year ago. Gain on sale of loans increased to $2.3 million from $1.7
million a year ago.
Net loans increased 50.1% to $383.8 million at September 30, 1997. Total
assets increased 47.1% to $492.9 million from $335.1 million at September 30,
1996. Deposits increased 48.4% to $454 million from $306 million a year ago.
Bank of Commerce's portfolio of SBA loans serviced for other investors
totaled $213.1 million at September 30, 1997, as compared to $199.8 million a
year ago. Loans serviced for others generated $384,000 in net fee income in
the third quarter and $1.2 million in the nine months ended September 30,
1997.
Asset quality remains high, with non-performing assets totaling $2.7
million, or one half of one per cent (0.55%) of assets, at September 30, 1997
compared to $3.8 million, or 1.13% a year ago. Total non-performing assets,
net of SBA guaranteed loans equaled $2.2 million, or .45% of assets at
September 30, 1997.
Shareholder equity increased to $34.3 million and tangible book value,
excluding approximately $11.6 million of estimated fair value of the bank's
SBA loan portfolio, rose to $6.05 per share at September 30, 1997. Adjusted
for the pending 2-for-1 split, tangible book value is $3.03 per share.
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. On Friday, October 3, Bank of Commerce shares
closed the trading day at $27.25.
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)
Third Quarter Nine Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
Interest Income $11,140 $7,179 $30,073 $20,458
Interest Expense $4,538 $2,562 $12,226 $7,697
Provision for Loan Losses $247 $0 $387 $627
Net Interest Income after
provision for losses
on loans $6,355 $4,617 $17,460 $12,134
Non-Interest Income $2,531 $1,132 $4,919 $4,219
Non-Interest Expense $5,395 $4,134 $14,603 $12,155
Income Tax $1,416 $664 $3,149 $1,719
Net Income $2,077 $951 $4,628 $2,479
Before 2 for 1 Split payable 12/10/97
Primary Earnings Per Share $.33 $.18 $.76 $.47
Fully Diluted Earnings Per Share $.32 $.17 $.73 $.44
Primary Average Shares Outstanding 6,363 4,598 6,125 4,538
Fully Diluted Average Shares
Outstanding 6,444 5,838 6,368 5,785
Cash Dividend per common share $.05 $.032 $.126 $.096
Adjust for 2-for-1
Split payable 12/10/97
Primary Earnings Per Share $.16 $.09 $.38 $.24
Fully Diluted Earnings Per Share $.16 $.08 $.36 $.22
Primary Average Shares Outstanding 12,725 9,195 12,251 9,076
Fully Diluted Average Shares
Outstanding 12,888 11,677 12,736 11,570
Cash Dividend per
common share $.025 $.016 $.063 $.048
Sept. 30, 1997 Dec. 31, 1996Sept. 30, 1996
Total Assets $492,872 $375,920 $335,056
Loans Receivable, gross $386,028 $290,483 $258,033
Investment Securities $18,229 $8,806 $11,839
Deposits $454,022 $345,238 $305,989
Shareholders' Equity $34,262 $27,377 $26,327
Tangible Book Value Per
Common Share $6.05 $5.45 $5.64
LOAN SERVICING PORTFOLIO:
Sept. 30, 1997 Sept. 30, 1996
Balance at end of quarter $213,177 $199,837
Balance at beginning of year $203,696 $196,663
Fee income generated during quarter $384 $285
Fee income generated year to date $1,164 $1,137
FINANCIAL RATIOS:
(annualized year-to-date) Sept. 30, 1997 Sept. 30, 1996
Return on average assets $1.39% 1.06%
Return on average equity $20.50% 13.03%
Efficiency ratio $64.16% 71.57%
Operating expenses to average assets $4.38% 5.20%
Net interest margin (ytd) $5.93% 6.21%
Average equity to average assets $6.78% 8.15%
NONPERFORMING ASSETS:
Sept. 30, 1997 Dec. 31, 1996Sept. 30, 1996
Accruing loans - 90 days past due $12 $318 $416
Non-accrual loans $996 $1,143 $1,356
Restructured loans $606 $0 $0
Total nonperforming loans $1,614 $1,461 $1,772
Other real estate owned $592 $656 $729
Total nonperforming assets (a) $2,206 $2,117 $2,501
Total nonperforming assets
to total assets 0.45% 0.56% 0.75%
(a) SBA Guaranteed loan portion of nonperforming assets was $523,000 at
September 30, 1997, $896,000 at December 31, 1996 and $1.3 million at
September 30, 1996.
SOURCE Bank of Commerce
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Company News On-Call: http://www.prnewswire.com or
fax, 800-758-5804, ext. 108597
CONTACT:
Len Cereghino & Co. corporate investor
relations, 206-448-1996, or Peter Q. Davis, Chairman & CEO, Bank
of Commerce, 619-232-2096
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