Pennsylvania Commerce Bancorp, Inc. (NASDAQ National Market
Symbol:COBH), parent company of Commerce Bank/Harrisburg, N.A.,
reported increased earnings, deposits, assets and loans for the
third quarter of 2005, announced Gary L. Nalbandian, Chairman of
the bank holding company. -0- *T THIRD QUARTER FINANCIAL HIGHLIGHTS
---------------------------------- SEPTEMBER 30, 2005 % Increase(1)
----------- Total Assets: $ 1.59 Billion 32% Total Deposits: $ 1.41
Billion 25% ----------- Total Loans (net): $ 753 Million 23%
-----------
----------------------------------------------------------------------
Total Revenues: $ 17.0 Million 15% ----------- Net Income: $ 2.3
Million 6% Diluted Net Income Per Share: $ 0.36 (16)% (1) Compared
to Third Quarter Ended September 30, 2004 *T In commenting on the
Company's financial results, Chairman Nalbandian noted the
following financial highlights: -- Total revenues grew by 15% for
the third quarter of 2005 to $17.0 million. -- Net interest income
increased by 7% for the third quarter, despite margin compression
to 3.74% caused by the flattening yield curve. -- Net income
increased by 6% for the third quarter and by 16% for the first nine
months of 2005. -- Earnings per share were $0.36 for the third
quarter, down from $0.43 for 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 $265 million, or 24%, over the previous 12-month
period. -- Non-interest bearing demand deposits increased 27% over
the past 12 months. -- Comparable Store Core Deposit Growth was 17%
for all stores open 2 years or more. -- Net loans grew $142
million, or 23%, for the prior 12 months to $753 million. -- Book
value per share increased 21% over the past year to $15.06. --
Stockholder's Equity increased $28.9 million, or 47%, to $90.8
million. -0- *T Income Statement ---------------- Three Months
Ended Nine Months Ended September 30 September 30
-------------------------- -------------------------- % % 2005 2004
Increase 2005 2004 Increase --------------------------
-------------------------- (dollars in thousands, except per share
data) Total Revenues: $17,029 $14,832 15% $48,954 $42,743 15% Total
Expenses: 13,337 10,890 22 36,613 31,456 16 Net Income: 2,325 2,198
6 7,341 6,307 16 ------ Diluted Net Income Per Share: $0.36 $0.43
(16) $1.15 $1.24 (7) Balance Sheet ------------- 9/30/2005
9/30/2004 % Increase ------------------------------------- (dollars
in thousands) Total Assets: $1,587,394 $1,205,181 32% Total Loans
(net): 753,306 611,088 23 Core Deposits: 1,353,800 1,088,586 24
Total Deposits: 1,405,601 1,124,906 25 Shareholder Returns
------------------- As of September 30, 2005
------------------------ Commerce S & P Index --------
----------- 1 Year 56% 12% 5 Years 26% -1% 10 Years 25% 9% Deposits
-------- The Company's deposit growth continues with total deposits
at September 30, 2005 reaching $1.4 billion, a $281 million, or
25%, increase over total deposits of $1.1 billion one year ago.
Core deposits grew by $265 million, or 24%, over the previous 12
months. 9/30/2005 9/30/2004 $ Increase % Increase -----------
----------- ----------- ----------- (dollars in thousands) Core
Deposits: $1,353,800 $1,088,586 $265,214 24% ----------- Total
Deposits: $1,405,601 $1,124,906 $280,695 25% ----------- Core
Deposits ------------- Core deposit growth by type of account is as
follows: 3rd Qtr 2005 Annual Cost of Growth 9/30/2005 9/30/2004 $
Increase Funds % ----------- ----------- ---------- ------- ------
(dollars in thousands) Demand Non-Interest $240,234 $189,636
$50,598 0.00% 27% Demand Interest 569,656 425,470 144,186 2.53 34
Savings 362,360 302,380 59,980 1.65 20 ----------- -----------
---------- ------- ------ Subtotal 1,172,250 917,486 254,764 1.68%
28% ------ Time 181,550 171,100 10,450 3.00 6 -----------
----------- ---------- ------- ------ Total Core Deposits
$1,353,800 $1,088,586 265,214 1.88% 24% ----------- -----------
---------- ------- ------ Core deposits, excluding time deposits,
grew 28% for the prior 12 months. Net Income and Net Income Per
Share ----------------------------------- Net income totaled $2.3
million for the third quarter of 2005, up $127,000, or 6%, over net
income of $2.2 million as reported for the third quarter of 2004.
Net income per share on a fully diluted basis for the third quarter
was $0.36, vs. $0.43 recorded for the same period a year ago. Net
income per share for the third quarter of 2005 reflects the impact
of a 26% increase in the number of total shares outstanding in the
third quarter of 2005 versus the same period one year ago as a
result of our public stock offering in the fourth quarter of 2004.
Three Months Ended Nine Months Ended September 30 September 30
--------------------------- -------------------------- % % 2005
2004 Increase 2005 2004 Increase ---------------------------
-------------------------- (dollars in thousands, except per share
data) Net Income: $2,325 $2,198 6% $7,341 $6,307 16% --------
-------- Diluted Net Income Per Share: $0.36 $0.43 (16)% $1.15
$1.24 (7)% For the first nine months of 2005, net income totaled
$7.3 million, up $1.0 million, or 16%, over net income of $6.3
million for the first nine months of 2004. On a diluted per share
basis, net income for the first nine months of 2005 was $1.15
compared to $1.24 for the first nine months of 2004. Net income per
share for the first nine months was also impacted by the additional
shares outstanding as described above. Total Revenues
-------------- Three Months Ended Nine Months Ended September 30
September 30 ----------------------------
---------------------------- % % 2005 2004 Increase 2005 2004
Increase ---------------------------- ----------------------------
(dollars in thousands) (dollars in thousands) Total Revenues:
$17,029 $14,832 15% $48,954 $42,743 15% --------- --------- Total
revenues (net interest income plus non-interest income) for the
third quarter increased $2.2 million to $17.0 million, a 15%
increase over the third quarter of 2004. Total revenues for the
first nine months of 2005 increased by $6.2 million, also a 15%
increase, over the same period in 2004. Net Interest Income and Net
Interest Margin ------------------------------------------- Net
interest income for the third quarter 2005 of $12.7 million
represented a 7% increase over the $11.9 million recorded a year
ago. For the first nine months of 2005, net interest income totaled
$37.8 million, up $3.3 million, or 9%, over the $34.5 million
recorded in the first nine months of 2004. The Company's strong
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 third quarter of
2005 was 3.74% compared to 4.23% for the third quarter 2004. The
net interest margin for the first nine months of 2005 was 3.89%,
compared to 4.33% for the first nine months of 2004. The decrease
is primarily the result of the flattening yield curve, which has
occurred over the past 12 months. 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 strong growth of core deposits. Net
Interest Income ---------------------------------------- September
Volume Rate Total % 2005 vs. 2004 Increase Change Increase Increase
---------------- --------- --------- --------- ---------- (dollars
in thousands) Quarter $2,190 $(1,328) $862 7% First Nine Months
$7,150 $(3,884) $3,266 9% Non-Interest Income -------------------
Non-interest income for the third quarter of 2005 increased to $4.3
million from $2.9 million a year ago, a 45% increase. Non-interest
income for the first nine months of 2005 was $11.2 million, a 36%
increase over the $8.3 million earned in the first nine months of
2004. The growth in non-interest income for the third quarter was
reflected in increased deposit charges and service fees, other
operating income and net investment securities gains as more fully
depicted below: Three Months Ended Nine Months Ended September 30
September 30 -------------------------- --------------------------
% % 2005 2004 Increase 2005 2004 Increase
-------------------------- -------------------------- (dollars in
thousands) Deposit Charges & Service Fees $3,246 $2,707 20%
$8,959 $7,465 20% Other Income 425 242 76 1,438 786 83
-------------------------- -------------------------- Subtotal
$3,671 $2,949 24 $10,397 $8,251 26 Net Investment Securities Gains
613 0 799 0 -------------------------- --------------------------
Total Non- Interest Income $4,284 $2,949 45% $11,196 $8,251 36%
Non-Interest Expenses --------------------- Non-interest expenses
for the third quarter of 2005 were $13.3 million, up 22% from $10.9
million a year ago. Non-interest expenses for the first nine months
of 2005 were $36.6 million, up 16% from $31.5 million a year ago.
The increases in non-interest expenses for both the quarter and the
first nine months 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 and third quarters of 2005. Lending
------- Loans increased $142 million, or 23%, to $753 million from
$611 million a year ago, and the growth was represented across all
loan categories. The composition of the Company's loan portfolio is
as follows: Loan Composition ---------------- % of % of $ %
9/30/2005 Total 9/30/2004 Total Increase Increase ---------- ------
---------- ------ --------- -------- (dollars in thousands)
Commercial $212,553 28% $158,941 26% $53,612 34% Consumer 138,646
18 99,576 16 39,070 39 Commercial Real Estate 318,729 42 270,422 44
48,307 18 Residential 92,230 12 89,324 14 2,906 3 ---------- ------
---------- ------ --------- -------- Gross Loans 762,158 100%
618,263 100% 143,895 23% Less: Reserves (8,852) (7,175) (1,677)
---------- ---------- --------- Net Loans $753,306 $611,088
$142,218 23% -------- Asset Quality ------------- Asset quality
continues to be strong as non-performing assets at September 30,
2005 totaled $2.1 million, or 0.13%, of total assets, versus $2.4
million, or 0.20%, of total assets one year ago. The Company's
asset quality results are highlighted below: Nine Months Ended
------------------------- 9/30/2005 9/30/2004 ---------- ----------
Non-Performing Assets/Assets 0.13% 0.20% Net Loan Charge-Offs 0.06%
0.13% Loan Loss Reserve/Gross Loans 1.16% 1.16% Non-Performing Loan
Coverage 458% 436% Non-Performing Assets/Capital and Reserves 2% 4%
Investments ----------- The Company's investment portfolio
increased by 41%, to $687 million from $487 million one year ago,
with 57% of this total in the available for sale portfolio and 43%
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 5.04%
and a current duration of 4.5 years as of September 30, 2005.
Capital ------- Stockholders' equity at September 30, 2005 totaled
$90.8 million, an increase of $28.9 million, or 47%, over
stockholders' equity of $61.9 million at September 30, 2004. Return
on average stockholders' equity (ROE) for the third quarter and
nine months ending September 30, 2005 and 2004 is shown in the
table below: Return on Equity ---------------- Three Months Ended
Nine Months Ended September 30 September 30 ---------------------
--------------------- 2005 2004 2005 2004 --------- ---------
--------- --------- 10.15% 15.75% 11.08% 15.91% ROE for the third
quarter and first nine 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 September 30, 2005 were as
follows: Regulatory Guidelines Commerce "Well Capitalized"
--------------------- --------------------- Leverage Ratio 7.32%
5.00% Tier 1 10.31 6.00 Total Capital 11.16 10.00 *T New Stores and
Expansion Plans -- On July 30, 2005, the Company opened its 26th
store, located on West Cumberland Street in Lebanon County. -- On
August 13, 2005, the Company opened its 27th store, located on
State Hill Road in Wyomissing, Berks County. -- The Central Penn
Business Journal has named Commerce one of Central Pennsylvania's
Top Fifty Fastest Growing Companies for the 9th year in a row. --
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 September 30,
------------------------------ (in thousands, except per share %
amounts) 2005 2004 Change ----------- ----------- ------ Income
Statement Data: Net interest income $12,745 $11,883 7% Provision
for loan losses 250 675 (63)% Noninterest income 4,284 2,949 45%
Noninterest operating expenses 13,337 10,890 22% Net income 2,325
2,198 +6% ----------- ----------- ------ Per Common Share Data: Net
income: Basic $0.39 $0.47 (17)% Net income: Diluted 0.36 0.43 (16)%
----------- ----------- Book Value Weighted average shares
outstanding: Basic 5,956 4,671 Diluted 6,393 5,049 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 2.17% 1.33% Deposit Cost of Funds 1.82 1.08 Net interest
margin 3.74 4.23 Return on average assets 0.63 0.73 Return on
average total stockholders' equity 10.15 15.75 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 Nine
Months Ended September 30, ------------------------------ (in
thousands, except per share % amounts) 2005 2004 Change -----------
----------- ------ Income Statement Data: Net interest income
$37,758 $34,492 9% Provision for loan losses 1,420 1,925 (26)%
Noninterest income 11,196 8,251 36% Noninterest operating expenses
36,613 31,456 16% Net income 7,341 6,307 +16% -----------
----------- ------ Per Common Share Data: Net income: Basic $1.23
$1.35 (9)% Net income: Diluted 1.15 1.24 (7)% -----------
----------- Book Value $15.06 $12.44 +21% ------ Weighted average
shares outstanding: Basic 5,933 4,634 Diluted 6,347 5,025 Balance
Sheet Data: Total assets $1,587,394 $1,205,181 32% Loans (net)
753,306 611,088 +23% ------ Allowance for loan losses 8,852 7,175
23% Investment Securities 686,558 487,049 41% Total deposits
1,405,601 1,124,906 25% ----------- ----------- Core deposits
1,353,800 1,088,586 +24% ----------- ----------- ------
Stockholders' equity 90,823 61,861 +47% ------ Capital:
Stockholders' equity to total assets 5.72% 5.13% Leverage Ratio
7.32 6.21 Risk based capital ratios: Tier 1 10.31 9.36 Total Capita
11.16 10.26 Performance Ratios: Cost of funds 1.95% 1.24% Deposit
Cost of Funds 1.62 0.97 Net interest margin 3.89 4.33 Return on
average assets 0.71 0.74 Return on average total stockholders'
equity 11.08 15.91 Asset Quality: Net charge-offs to average loans
outstanding 0.06% 0.13% Nonperforming loans to total period-end
loans 0.25 0.27 Nonperforming assets to total period-end assets
0.13 0.20 Allowance for loan losses to total period-end loans 1.16
1.16 Allowance for loan losses to nonperforming loans 458% 436%
Pennsylvania Commerce Bancorp, Inc. and Subsidiaries Average
Balances and Net Interest Income (unaudited) Quarter ended,
---------------------------- September 2005
---------------------------- Average Average Balance Interest Rate
---------------------------- (dollars in thousands) Earning Assets
------------------------------------------ Investment securities
Taxable $604,417 $7,548 5.00 % Tax-exempt 7,403 111 6.00
----------------------------------------------------------------------
Total securities 611,820 7,659 5.01 Federal funds sold 325 3 3.61
Loans receivable Mortgage and construction 394,589 6,705 6.74
Commercial loans and lines of credit 198,775 3,521 7.03 Consumer
138,815 2,159 6.17 Tax-exempt 9,308 108 4.64
----------------------------------------------------------------------
Total loans receivable 741,487 12,493 6.76
----------------------------------------------------------------------
Total earning assets $1,353,632 $20,155 5.91 %
----------------------------------------------------------------------
Sources of Funds ------------------------------------------
Interest-bearing deposits Regular savings $330,563 $1,378 1.65 %
Interest checking and money market 490,208 3,193 2.58 Time deposits
179,493 1,359 3.00 Public funds time 31,429 265 3.35
----------------------------------------------------------------------
Total interest-bearing deposits 1,031,693 6,195 2.38 Short-term
borrowings 93,472 861 3.65 Junior subordinated debt 13,600 354
10.41
----------------------------------------------------------------------
Total interest-bearing liabilities 1,138,765 7,410 2.58
Noninterest-bearing funds (net) 214,867
----------------------------------------------------------------------
Total sources to fund earning assets $1,353,632 7,410 2.17
----------------------------------------------------------------------
Net interest income and margin $12,745 3.74 %
----------------------------------------------------------------------
Other Balances ------------------------------------------ Cash and
due from banks $48,936 Other assets 61,593 Total assets 1,464,161
Demand deposits (noninterest-bearing) 230,992 Other liabilities
3,487 Stockholders' equity 90,917 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,
---------------------------- September 2004
---------------------------- Average Average Balance Interest Rate
---------------------------- (dollars in thousands) Earning Assets
------------------------------------------ Investment securities
Taxable $497,218 $6,096 4.90 % Tax-exempt 6,835 100 5.85
----------------------------------------------------------------------
Total securities 504,053 6,196 4.92 Federal funds sold 180 1 Loans
receivable Mortgage and construction 351,969 5,682 6.42 Commercial
loans and lines of credit 158,333 2,332 5.86 Consumer 98,101 1,353
5.49 Tax-exempt 6,179 74 4.79
----------------------------------------------------------------------
Total loans receivable 614,582 9,441 6.11
----------------------------------------------------------------------
Total earning assets $1,118,815 $15,638 5.56 %
----------------------------------------------------------------------
Sources of Funds ------------------------------------------
Interest-bearing deposits Regular savings $283,841 $736 1.03 %
Interest checking and money market 346,437 1,062 1.22 Time deposits
169,794 1,025 2.40 Public funds time 48,850 224 1.82
----------------------------------------------------------------------
Total interest-bearing deposits 848,922 3,047 1.43 Short-term
borrowings 91,101 354 1.55 Junior subordinated debt 13,600 354
10.41
----------------------------------------------------------------------
Total interest-bearing liabilities 953,623 3,755 1.57
Noninterest-bearing funds (net) 165,192
----------------------------------------------------------------------
Total sources to fund earning assets $1,118,815 3,755 1.33
----------------------------------------------------------------------
Net interest income and margin $11,883 4.23 %
----------------------------------------------------------------------
Other Balances ------------------------------------------ Cash and
due from banks $37,600 Other assets 44,162 Total assets 1,200,576
Demand deposits (noninterest-bearing) 187,799 Other liabilities
3,619 Stockholders' equity 55,535 *T
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