-Pennsylvania Commerce Bancorp, Inc. (NASDAQ National Market
Symbol:COBH), parent company of Commerce Bank/Harrisburg, N.A.,
reported record earnings and increased deposits, assets and loans
for the second quarter of 2005, announced Gary L. Nalbandian,
Chairman of the bank holding company. -0- *T SECOND QUARTER
FINANCIAL HIGHLIGHTS ----------------------------------- JUNE 30,
2005 % Increase(1) ----------- Total Assets: $ 1.45 Billion 22%
Total Deposits: $ 1.23 Billion 26% ----------- Total Loans (net): $
714 Million 21% -----------
----------------------------------------------------------------------
Total Revenues: $ 16.6 Million 15% Net Income: $ 2.6 Million 17%
---------- Diluted Net Income Per Share: $ 0.40 (7)% (1) Compared
to Second Quarter Ended June 30, 2004 *T In commenting on the
Company's financial results, Chairman Nalbandian noted the
following financial highlights: -- Net income increased 17% for the
second quarter of 2005 to $2.6 million. -- Total revenues grew by
15% over the same period in 2004, despite margin compression to
3.88% caused by the flattening yield curve. -- Earnings per share
were $0.40 for the second quarter, down slightly from the same
period one-year ago due to a 26% increase in the number of total
shares outstanding as a result of our public stock offering in the
fourth quarter of 2004. -- Core deposits grew $247 million, or 27%,
over the previous 12-month period. -- Demand deposits increased 29%
over the past 12 months. -- Deposit service charges and fees grew
20% year over year. -- Net loans grew $126 million, or 21%, over
the second quarter one year ago. -- Book value per share increased
41% over the past year to $15.12. Income Statement -0- *T Three
Months Ended Six Months Ended June 30, June 30,
-------------------------- -------------------------- % % 2005 2004
Increase 2005 2004 Increase --------------------------
-------------------------- (dollars in thousands, except per share
data) Total Revenues: $16,561 $ 14,357 15% $31,925 $ 27,911 14%
Total Expenses: 12,129 10,449 16 23,276 20,566 13 Net Income: 2,555
2,181 17% 5,016 4,109 22% -------- -------- Diluted Net Income Per
Share: $ 0.40 $ 0.43 (7)% $ 0.79 $ 0.81 (2)% *T Balance Sheet -0-
*T 6/30/2005 6/30/2004 Increase
---------------------------------------------- (dollars in
thousands) Total Assets: $ 1,450,759 $ 1,184,870 22% Total Loans
(net): 713,979 588,398 21 Core Deposits: 1,158,679 911,838 27 Total
Deposits: 1,229,461 978,258 26 *T Shareholder Returns -0- *T As of
June 30, 2005 ------------------- Commerce S & P Index --------
----------- 1 Year 35% 6% 5 Years 29% -2% 10 Years 26% 10% *T Total
Deposits The Company's deposit growth continues with total deposits
at June 30, 2005 reaching $1.23 billion, a $251 million, or 26%,
increase over total deposits of $978 million one year ago. -0- *T
6/30/2005 6/30/2004 $ Increase % Increase ----------- -----------
---------- ---------- (dollars in thousands) Core Deposits:
$1,158,679 $911,838 $246,841 27% ---------- Total Deposits:
$1,229,461 $978,258 $251,203 26% ---------- *T Core Deposits Core
deposit growth by type of account is as follows: -0- *T 2nd Qtr
2005 Annual 6/30/2005 6/30/2004 Cost of Funds Growth % -----------
----------- ------------- -------- (dollars in thousands) Demand $
234,309 $ 182,282 0.00% 29% Interest Bearing Demand 417,874 288,485
1.99 45 Savings 327,389 270,382 1.37 21 ----------- -----------
------------- -------- Subtotal 979,572 741,149 1.35% 32% --------
Time 179,107 170,689 2.87 5 ----------- ----------- -------------
-------- Total Core Deposits $1,158,679 $ 911,838 1.40% 27%
----------- ----------- ------------- -------- *T Core deposits,
excluding time deposits, grew 32% for the prior 12 months. Net
Income and Net Income Per Share Net income totaled $2.6 million for
the second quarter of 2005, up $374,000, or 17%, over net income of
$2.2 million as reported for the second quarter of 2004. Net income
per share on a fully diluted basis for the second quarter was
$0.40, vs. $0.43 recorded for the same period a year ago. Net
income per share for the second quarter of 2005 reflects the impact
of an additional 920,000 shares (adjusted for a two-for-one stock
split) issued during the fourth quarter of 2004 through a public
stock offering and an additional 200,000 shares (adjusted for the
two-for-one stock split) issued at the end of the third quarter
2004 through a private placement. -0- *T Three Months Ended Six
Months Ended June 30, June 30, ------------------------
------------------------ % % 2005 2004 Increase 2005 2004 Increase
------------------------ ------------------------ (dollars in
thousands, except per share data) Net Income: $2,555 $2,181 17%
$5,016 $4,109 22% -------- -------- Diluted Net Income Per Share: $
0.40 $ 0.43 (7)% $ 0.79 $ 0.81 (2)% *T For the first six months of
2005, net income totaled $5.0 million, up $907,000, or 22%, over
net income of $4.1 million for the first six months of 2004. On a
diluted per share basis, net income for the first six months of
2005 was $0.79 compared to $0.81 for the first six months of 2004.
Net income per share for the first six months was also impacted by
the additional shares outstanding as described above. Total
Revenues -0- *T Three Months Ended Six Months Ended June 30 June 30
---------------------------- ---------------------------- 2005 2004
% Increase 2005 2004 % Increase ----------------------------
---------------------------- (dollars in thousands) (dollars in
thousands) Total Revenues: $16,561 $14,357 15% $31,925 $27,911 14%
---------- ---------- *T Total revenues (net interest income plus
non-interest income) for the second quarter increased $2.2 million
to $16.6 million, a 15% increase over the second quarter of 2004.
Total revenues for the first six months of 2005 increased by $4.0
million, or 14%, over the same period in 2004. Net Interest Income
and Net Interest Margin Net interest income for the second quarter
2005 of $12.9 million represented a 10% increase over the $11.6
million recorded a year ago. For the first six months of 2005, net
interest income totaled $25.0 million, up $2.4 million, or 11%,
over the $22.6 million recorded in the first six months of 2004.
The Company's low-cost core deposit growth fueled volume increases
in the level of interest earning assets, which resulted in the
increase in net interest income. The net interest margin for the
second quarter of 2005 was 3.88% compared to 4.35% for the second
quarter 2004. The net interest margin for the first six months of
2005 was 3.97%, compared to 4.38% for the first six months of 2004.
The decrease is primarily the result of the flattening yield curve,
which has occurred during the fourth quarter 2004 and first half of
2005. Net Interest Income and Rate/Volume Analysis As shown below,
the increase in net interest income was due to volume increases in
the Company's earning assets, which were fueled by the Company's
continued growth of low-cost core deposits. -0- *T Net Interest
Income ----------------------------------------- June Volume Rate
Total % 2005 vs. 2004 Increase Change Increase Increase
----------------------- ---------- -------- ---------- ----------
(dollars in thousands) Quarter $ 2,542 $(1,328) $ 1,214 10% First
Six Months $ 4,960 $(2,556) $ 2,404 11% *T Non-Interest Income
Non-interest income for the second quarter of 2005 increased to
$3.7 million from $2.7 million a year ago, a 36% increase.
Non-interest income for the first six months of 2005 was $6.9
million, a 30% increase over the $5.3 million earned in the first
six months of 2004. The growth in non-interest income for the
second quarter was reflected in increased deposit charges and
service fees and other operating income as more fully depicted
below: -0- *T Three Months Ended Six Months Ended June 30, June 30,
------------------------ ------------------------ % % 2005 2004
Increase 2005 2004 Increase ------------------------
------------------------ (dollars in thousands) Deposit Charges
& Service Fees $3,018 $2,517 20% $5,713 $4,758 20% Other Income
502 199 152 1,013 544 86 ------------------------
------------------------ Subtotal $3,520 $2,716 30 $6,726 $5,302 27
Net Investment Securities Gains 186 0 186 0
------------------------ ------------------------ Total
Non-Interest Income $3,706 $2,716 36% $6,912 $5,302 30% *T
Non-Interest Expenses Non-interest expenses for the second quarter
of 2005 were $12.1 million, up 16% from $10.4 million a year ago.
Non-interest expenses for the first six months of 2005 were $23.3
million, up 13% from $20.6 million a year ago. The increases in
non-interest expenses for both the quarter and the first half of
2005 were widespread across all categories and include the impact
of new store growth during the fourth quarter of 2004 as well as
the second quarter of 2005. Lending Loans increased $126 million,
or 21%, to $714 million from $588 million a year ago, and the
growth was represented across all loan categories. The composition
of the Company's loan portfolio is as follows: -0- *T Loan
Composition ---------------- % of % of $ % 6/30/2005 Total
6/30/2004 Total Increase Increase ---------- ----- ---------- -----
--------- --------- (dollars in thousands) Commercial $ 204,813 28%
$ 158,364 27% $ 46,449 29% Consumer 131,290 18 88,443 15 42,847 48
Commercial Real Estate 298,373 42 264,511 44 33,862 13 Residential
88,077 12 84,099 14 3,978 5 ---------- ----- ---------- -----
--------- --------- Gross Loans 722,553 100% 595,417 100% 127,136
21% Less: Reserves (8,573) (7,019) (1,554) ---------- ----------
--------- Net Loans $ 713,980 $ 588,398 $125,582 21% --------- *T
Asset Quality Asset quality continues to be strong as
non-performing assets at June 30, 2005 totaled $1.6 million, or
0.11%, of total assets, versus $1.3 million, or 0.11%, of total
assets one year ago. The Company's asset quality results are
highlighted below: -0- *T Six Months Ended ---------------------
6/30/2005 6/30/2004 ---------- ---------- Non-Performing
Assets/Assets 0.11% 0.11% Net Loan Charge-Offs 0.06% 0.04% Loan
Loss Reserve/Gross Loans 1.19% 1.18% Non-Performing Loan Coverage
655% 855% Non-Performing Assets/Capital and Reserves 2% 2% *T
Investments The Company's investment portfolio increased by 21%, to
$607 million from $504 million one year ago, with 60% of this total
in the available for sale portfolio and 40% in the held to maturity
portfolio. The investment portfolio, consisting mainly of high
quality U.S. Government agency and mortgage-backed obligations, has
a weighted average yield of 5.05% and a current duration of 3.7
years as of June 30, 2005. Capital Stockholders' equity at June 30,
2005 totaled $91 million, an increase of $40 million, or 79%, over
stockholders' equity of $51 million at June 30, 2004. Return on
average stockholders' equity (ROE) for the second quarter and six
months ending June 30, 2005 and 2004 is shown in the table below:
-0- *T Return on Equity ---------------- Three Months Ended June
30, Six Months Ended June 30, --------------------------------
-------------------------------- 2005 2004 2005 2004 ---- ---- ----
---- 11.47% 17.14% 11.58% 15.99% *T ROE for the second quarter and
first six months of 2005 reflects the impact of the additional
capital raised by the Company during the fourth quarter of 2004.
The Company's capital ratios at June 30, 2005 were as follows: -0-
*T Regulatory Guidelines Commerce "Well Capitalized" --------
--------------------- Leverage Ratio 7.34% 5.00% Tier 1 10.86 6.00
Total Capital 11.75 10.00 *T New Stores and Expansion Plans -- On
April 30, 2005, the Company opened its 25th store, located on Mt.
Zion Road in York County. -- On July 30, 2005, the Company will
open its 26th store, located on West Cumberland Street in Lebanon
County. -- On August 13, 2005, the Company will open its 27th
store, located on State Hill Road in Wyomissing, Berks County. --
Commerce serves customers in Cumberland, Dauphin, Lebanon, York,
and Berks counties. -- The Company plans to expand into the
Lancaster County market in 2006. -- Pennsylvania Commerce Bancorp
is an independent member of the "Commerce Bank Network," a network
of banks established by Commerce Bancorp, Inc. (NYSE:CBH) based in
Cherry Hill, N.J. FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION
The Company may from time to time make written or oral
"forward-looking statements," including statements contained in the
Company's filings with the Securities and Exchange Commission, in
its reports to stockholders and in other communications by the
Company, which are made in good faith by the Company pursuant to
the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements include
statements with respect to the Company's beliefs, plans,
objectives, goals, expectations, anticipations, estimates and
intentions, that are subject to significant risks and uncertainties
and are subject to change based on various factors (some of which
are beyond the Company's control). The words "may", "could",
"should", "would", "believe", "anticipate", "estimate", "expect",
"intend", "plan" and similar expressions are intended to identify
forward-looking statements. The following factors, among others,
could cause the Company's financial performance to differ
materially from that expressed in such forward-looking statements:
the strength of the United States economy in general and the
strength of the local economies in which the Company conducts
operations; the effects of, and changes in, trade, monetary and
fiscal policies, including interest rate policies of the Board of
Governors of the Federal Reserve System (the "FRB"); inflation;
interest rate, market and monetary fluctuations; the timely
development of competitive new products and services by the Company
and the acceptance of such products and services by customers; the
willingness of customers to substitute competitors' products and
services for the Company's products and services and vice versa;
the impact of changes in financial services' laws and regulations
(including laws concerning taxes, banking, securities and
insurance); the impact of the rapid growth of the Company; the
Company's dependence on Commerce Bancorp, Inc. to provide various
services to the Company; changes in the Company's allowance for
loan losses; effect of terrorists attacks and threats of actual
war; unanticipated regulatory or judicial proceedings; changes in
consumer spending and saving habits; and the success of the Company
at managing the risks involved in the foregoing. The Company
cautions that the foregoing list of important factors is not
exclusive. The Company does not undertake to update any
forward-looking statements, whether written or oral, that may be
made from time to time by or on behalf of the Company. -0- *T
Pennsylvania Commerce Bancorp, Inc. Selected Consolidated Financial
Data (Unaudited) At or for the Three Months Ended June 30,
----------------------------------- (in thousands, except per share
% amounts) 2005 2004 Change ----------- ----------- -----------
Income Statement Data: Net interest income $ 12,855 $ 11,641 10%
Provision for loan losses 625 675 (7)% Noninterest income 3,706
2,716 36% Noninterest operating expenses 12,129 10,449 16% Net
income 2,555 2,181 + 17% ----------- ----------- ----------- Per
Common Share Data: Net income: Basic $ 0.43 $ 0.47 (9)% Net income:
Diluted 0.40 0.43 (7)% ----------- ----------- Book Value Weighted
average shares outstanding: Basic 5,940 4,627 Diluted 6,351 5,044
Balance Sheet Data: Total assets Loans (net) Allowance for loan
losses Investment Securities Total deposits Core deposits
Stockholders' equity Capital: Stockholders' equity to total assets
Leverage Ratio Risk based capital ratios: Tier 1 Total Capital
Performance Ratios: Cost of funds 1.94% 1.19% Deposit Cost of Funds
1.57 0.91 Net interest margin 3.88 4.35 Return on average assets
0.72 0.76 Return on average total stockholders' equity 11.47 17.14
Asset Quality: Net charge-offs to average loans outstanding
Nonperforming loans to total period-end loans Nonperforming assets
to total period-end assets Allowance for loan losses to total
period-end loans Allowance for loan losses to nonperforming loans
At or for the Six Months Ended June 30,
----------------------------------- (in thousands, except per share
% amounts) 2005 2004 Change ----------- ----------- -----------
Income Statement Data: Net interest income $ 25,013 $ 22,609 11%
Provision for loan losses 1,170 1,250 (6)% Noninterest income 6,912
5,302 30% Noninterest operating expenses 23,276 20,566 13% Net
income 5,016 4,109 + 22% ----------- ----------- ----------- Per
Common Share Data: Net income: Basic $ 0.84 $ 0.88 (5)% Net income:
Diluted 0.79 0.81 (2)% ----------- ----------- Book Value $ 15.12 $
10.76 + 41% ----------- Weighted average shares outstanding: Basic
5,921 4,615 Diluted 6,330 5,034 Balance Sheet Data: Total assets
$1,450,759 $1,184,870 22% Loans (net) 713,979 588,398 + 21%
----------- Allowance for loan losses 8,573 7,019 22% Investment
Securities 607,032 503,742 21% Total deposits 1,229,461 978,258 26%
----------- ----------- Core deposits 1,158,679 911,838 + 27%
----------- ----------- ----------- Stockholders' equity 91,051
51,006 + 79% ----------- Capital: Stockholders' equity to total
assets 6.28% 4.30% Leverage Ratio 7.34 5.80 Risk based capital
ratios: Tier 1 10.86 8.72 Total Capital 11.75 9.63 Performance
Ratios: Cost of funds 1.83% 1.19% Deposit Cost of Funds 1.52 0.92
Net interest margin 3.97 4.38 Return on average assets 0.75 0.74
Return on average total stockholders' equity 11.58 15.99 Asset
Quality: Net charge-offs to average loans outstanding 0.06% 0.04%
Nonperforming loans to total period-end loans 0.18 0.14
Nonperforming assets to total period-end assets 0.11 0.11 Allowance
for loan losses to total period-end loans 1.19 1.18 Allowance for
loan losses to nonperforming loans 655% 855% Pennsylvania Commerce
Bancorp, Inc. and Subsidiaries Average Balances and Net Interest
Income (unaudited) Quarter ended,
----------------------------------------------------------------------
June 2005
----------------------------------------------------------------------
Average Average Balance Interest Rate
------------------------------- (dollars in thousands) Earning
Assets -------------------------------------- Investment securities
Taxable $609,060 $7,587 4.98% Tax-exempt 7,113 107 6.02
----------------------------------------------------------------------
Total securities 616,173 7,694 4.99 Federal funds sold 0 0 Loans
receivable Mortgage and construction 384,180 6,368 6.65 Commercial
loans and lines of credit 193,509 3,241 6.72 Consumer 127,515 1,909
6.00 Tax-exempt 7,186 82 4.58
----------------------------------------------------------------------
Total loans receivable 712,390 11,600 6.53
----------------------------------------------------------------------
Total earning assets $1,328,563 $19,294 5.82%
----------------------------------------------------------------------
Sources of Funds --------------------------------------
Interest-bearing deposits Regular savings $317,020 $1,080 1.37%
Interest checking and money market 458,575 2,587 2.26 Time deposits
177,065 1,267 2.87 Public funds time 34,732 261 3.01
----------------------------------------------------------------------
Total interest-bearing deposits 987,392 5,195 2.11 Short-term
borrowings 112,766 889 3.16 Junior subordinated debt 13,600 355
10.44
----------------------------------------------------------------------
Total interest-bearing liabilities 1,113,758 6,439 2.32
Noninterest-bearing funds (net) 214,805
----------------------------------------------------------------------
Total sources to fund earning assets $1,328,563 6,439 1.94
----------------------------------------------------------------------
Net interest income and margin $12,855 3.88%
----------------------------------------------------------------------
Other Balances -------------------------------------- Cash and due
from banks $41,959 Other assets 55,719 Total assets 1,426,241
Demand deposits (noninterest-bearing) 218,107 Other liabilities
5,064 Stockholders' equity 89,312 Quarter ended,
----------------------------------------------------------------------
March 2005
----------------------------------------------------------------------
Average Average Balance Interest Rate
------------------------------- (dollars in thousands) Earning
Assets -------------------------------------- Investment securities
Taxable $526,341 $6,591 5.01% Tax-exempt 6,440 105 6.52
----------------------------------------------------------------------
Total securities 532,781 6,696 5.03 Federal funds sold 270 2 2.66
Loans receivable Mortgage and construction 368,689 6,032 6.64
Commercial loans and lines of credit 172,078 2,696 6.35 Consumer
118,824 1,679 5.73 Tax-exempt 6,607 75 4.60
----------------------------------------------------------------------
Total loans receivable 666,198 10,482 6.38
----------------------------------------------------------------------
Total earning assets $1,199,249 $17,180 5.77%
----------------------------------------------------------------------
Sources of Funds --------------------------------------
Interest-bearing deposits Regular savings $302,987 $915 1.22%
Interest checking and money market 418,702 2,029 1.97 Time deposits
174,653 1,165 2.71 Public funds time 35,189 211 2.43
----------------------------------------------------------------------
Total interest-bearing deposits 931,531 4,320 1.88 Short-term
borrowings 51,740 348 2.69 Junior subordinated debt 13,600 354
10.43
----------------------------------------------------------------------
Total interest-bearing liabilities 996,871 5,022 2.04
Noninterest-bearing funds (net) 202,378
----------------------------------------------------------------------
Total sources to fund earning assets $1,199,249 $5,022 1.70
----------------------------------------------------------------------
Net interest income and margin $12,158 4.07%
----------------------------------------------------------------------
Other Balances -------------------------------------- Cash and due
from banks $37,513 Other assets 50,459 Total assets 1,287,221
Demand deposits (noninterest-bearing) 200,418 Other liabilities
4,571 Stockholders' equity 85,361 Quarter ended,
----------------------------------------------------------------------
June 2004
----------------------------------------------------------------------
Average Average Balance Interest Rate
------------------------------- (dollars in thousands) Earning
Assets -------------------------------------- Investment securities
Taxable $505,413 $6,248 4.94% Tax-exempt 6,840 100 5.85
----------------------------------------------------------------------
Total securities 512,253 6,348 4.95 Federal funds sold 0 0 Loans
receivable Mortgage and construction 330,853 5,251 6.38 Commercial
loans and lines of credit 142,191 2,025 5.73 Consumer 84,155 1,137
5.43 Tax-exempt 6,077 73 4.83
----------------------------------------------------------------------
Total loans receivable 563,276 8,486 6.06
----------------------------------------------------------------------
Total earning assets $1,075,529 $14,834 5.54%
----------------------------------------------------------------------
Sources of Funds --------------------------------------
Interest-bearing deposits Regular savings $264,660 $592 0.90%
Interest checking and money market 301,937 685 0.91 Time deposits
166,741 975 2.35 Public funds time 47,992 194 1.63
----------------------------------------------------------------------
Total interest-bearing deposits 781,330 2,446 1.26 Short-term
borrowings 126,184 392 1.25 Junior subordinated debt 13,600 355
10.44
----------------------------------------------------------------------
Total interest-bearing liabilities 921,114 3,193 1.39
Noninterest-bearing funds (net) 154,415
----------------------------------------------------------------------
Total sources to fund earning assets $1,075,529 3,193 1.19
----------------------------------------------------------------------
Net interest income and margin $11,641 4.35%
----------------------------------------------------------------------
Other Balances -------------------------------------- Cash and due
from banks $33,941 Other assets 48,322 Total assets 1,157,792
Demand deposits (noninterest-bearing) 180,734 Other liabilities
4,779 Stockholders' equity 51,165 *T
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