Pacific Mercantile Bancorp Reports Third Quarter 2020 Operating Results
Pacific Mercantile Bancorp (PMBC) reported a strong financial performance for Q3 2020, with net income of $5.1 million, or $0.21 per share, up from $1.9 million in Q2 2020. The bank saw a 7% increase in net interest income, driven by a decrease in interest expense of 22.1%. Noninterest income soared by 91.7%, attributed to a gain on SBA loans and increased service fees. The bank reduced borrowings significantly, and non-performing loans fell by 32%. Overall, PMBC is positioned to benefit from ongoing improvements in its deposit structure and asset quality.
- Net income increased by $3.2 million from Q2 2020.
- Net interest income rose by $936,000, or 7.0%.
- Noninterest income increased by $1.1 million, or 91.7%.
- No provision for loan and lease losses during Q3 2020.
- Non-performing loans decreased by 32%.
- Noninterest-bearing deposits grew by $65.4 million, or 11.0%.
- Gross loans decreased by $90.8 million, or 6.6%, from the previous quarter.
- Total deposits fell by $21.0 million, or 1.5%.
Third Quarter Summary
- Net income of
$5.1 million , or$0.21 per fully diluted share - Ongoing focus on reducing costs of deposits resulted in a decrease in interest expense over last quarter of
$500 thousand , or22.1% - Interest income increased
$436 thousand , and in combination with the decrease in interest expense resulted in an increase to net interest income of$936 thousand , or7.0% over the prior quarter - Noninterest income increased
$1.1 million , or91.7% , over the prior quarter as a result of gain on sale of SBA loans, increased service charges and fee income - Noninterest bearing deposits increased
$65.4 million , or11.0% , from June 30, 2020, and$264.5 million , or66.6% , from December 31, 2019 - Borrowings decreased to
$24.0 million from$74.0 million the prior quarter, replaced with core deposit funding - No provision for loan and lease losses for the quarter as a result of the decrease in the balance of our loan portfolio and a reduction in non-performing loans
- Allowance for loan and lease losses as a percentage of total loans outstanding increased from the prior quarter to
1.37% , or1.75% if the outstanding balance of Paycheck Protection Program ("PPP") loans are excluded from total loans (which is a non-GAAP financial measure), as compared to1.33% and1.67% , respectively, as of June 30, 2020.
COSTA MESA, Calif., Nov. 02, 2020 (GLOBE NEWSWIRE) -- Pacific Mercantile Bancorp (Nasdaq: PMBC), the holding company of Pacific Mercantile Bank (the “Bank”), a wholly owned banking subsidiary, today reported its financial results for the three and nine months ended September 30, 2020.
For the third quarter of 2020, the Company reported net income of
Brad R. Dinsmore, President & CEO of Pacific Mercantile Bancorp, said, “Our continued improvement in executing our core strategies allowed us to deliver an increase in profitability in the third quarter. With each quarter, we are making consistent progress on reducing our cost of deposits, increasing our level of non-interest income, and improving our operating leverage, resulting in a higher level of earnings.
“Although the COVID-19 pandemic continues to impact the Southern California market that we serve, we saw encouraging trends in asset quality. Non-performing loans decreased by
“While the environment continues to be challenging for loan growth and the ongoing pandemic creates uncertainty around credit costs, we believe that the positive trends we are seeing in net interest margin, non-interest income and operating efficiency should enable us to deliver a consistent level of core earnings for the foreseeable future. Our improved cost structure and deposit base will also position us well to deliver a higher level of profitability when economic conditions improve, commercial loan demand returns to a more normalized level, and we generate a higher level of balance sheet growth,” said Mr. Dinsmore.
Results of Operations
The following tables show a summary of our operating results for the dates and periods indicated. The discussion below highlights the key factors contributing to the changes shown in the following tables for the three and nine months ended September 30, 2020, as compared to the three months ended June 30, 2020 and the three and nine months ended September 30, 2019.
| Three Months Ended | |||||||||||||||||||
| September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | September 30, 2019 | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| Total interest income | $ | 16,016 | $ | 15,580 | $ | 14,769 | $ | 16,277 | $ | 16,767 | |||||||||
| Total interest expense | 1,762 | 2,262 | 3,296 | 3,734 | 4,024 | ||||||||||||||
| Net interest income | 14,254 | 13,318 | 11,473 | 12,543 | 12,743 | ||||||||||||||
| Provision for loan and lease losses | — | 2,850 | 6,200 | 3,750 | 2,100 | ||||||||||||||
| Total noninterest income | 2,245 | 1,171 | 1,095 | 1,369 | 1,342 | ||||||||||||||
| Total noninterest expense | 9,275 | 8,934 | 9,720 | 9,790 | 9,697 | ||||||||||||||
| Income tax provision (benefit) | 2,138 | 800 | (991 | ) | (68 | ) | 658 | ||||||||||||
| Net income (loss) | $ | 5,086 | $ | 1,905 | $ | (2,361 | ) | $ | 440 | $ | 1,630 | ||||||||
| Nine Months Ended September 30, | |||||||||||
| 2020 | 2019 | ||||||||||
| (Dollars in thousands) | |||||||||||
| Total interest income | $ | 46,364 | $ | 49,399 | |||||||
| Total interest expense | 7,320 | 12,387 | |||||||||
| Net interest income | 39,044 | 37,012 | |||||||||
| Provision for loan and lease losses | 9,050 | 5,400 | |||||||||
| Total noninterest income | 4,510 | 4,219 | |||||||||
| Total noninterest expense | 27,925 | 28,388 | |||||||||
| Income tax provision | 1,948 | 2,204 | |||||||||
| Net income | $ | 4,631 | $ | 5,239 | |||||||
Net Interest Income
Q3 2020 vs Q2 2020. Net interest income increased
- An increase in interest income of
$436 thousand , or2.8% , primarily attributable to the successful execution of PPP with an increase in loans resulting in increased fee income for the quarter, and increased income from loan prepayments and interest recoveries on previously charged-off loans during the three months ended September 30, 2020 as compared to the three months ended June 30, 2020; and - A decrease in interest expense of
$500 thousand , or22.1% , primarily attributable to our ongoing focus on reducing costs of deposits during the three months ended September 30, 2020, driven by lowered rates a favorable change in our mix of deposits.
Our net interest margin increased to
Q3 2020 vs Q3 2019. Net interest income increased
- A decrease in interest expense of
$2.3 million , or56.2% , primarily attributable to our focus on reducing costs of deposits in combination with the 175 basis point reduction in interest rates by the Federal Reserve during the period from September 30, 2019 to September 30, 2020. Also contributing to the decrease was a favorable change in our mix of deposits from higher costing deposits to noninterest bearing deposits; partially offset by - A decrease in interest income of
$751 thousand , or4.5% , primarily attributable to a decrease in interest earned on short-term investments as a result of lower average yields in the declining interest rate environment during the three months ended September 30, 2020 as compared to the three months ended September 30, 2019, partially offset by increased income from our participation in PPP.
YTD 2020 vs YTD 2019. Net interest income increased
- A decrease in interest expense of
$5.1 million , or40.9% , primarily attributable to our focus on reducing costs of deposits in combination with the 175 basis point reduction in interest rates by the Federal Reserve during the period from September 30, 2019 to September 30, 2020; partially offset by - A decrease in interest income of
$3.0 million , or6.1% , primarily attributable to a decrease in interest earned on short-term investments as a result of lower average yields in the declining interest rate environment during the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019, partially offset by increased income from our participation in PPP.
Provision for Loan and Lease Losses
Q3 2020 vs Q2 2020. We recorded no provision for loan and lease losses during the three months ended September 30, 2020 as a result of a decrease in the balance of our loan portfolio. We recorded a
Q3 2020 vs Q3 2019. We recorded no provision for loan and lease losses during the three months ended September 30, 2020 as a result of a decrease in our loan portfolio. We recorded a
YTD 2020 vs YTD 2019. We recorded a
Noninterest Income
Q3 2020 vs Q2 2020. Noninterest income increased by
Q3 2020 vs Q3 2019. Noninterest income increased by
YTD 2020 vs YTD 2019. Noninterest income increased
- An increase of
$735 thousand in deposit related fees, credit card fees and loan service fees during the nine months ended September 30, 2020 as compared to the same period in 2019; partially offset by - Gain on sale of SBA loans of
$535 thousand during the nine months ended September 30, 2020 as compared to gain on sale of$866 thousand during the same period in 2019.
Noninterest Expense
Q3 2020 vs Q2 2020. Noninterest expense increased
- An increase of
$156 thousand in FDIC insurance expense based on an increased average asset size that resulted from our participation in PPP, and - An increase of
$92 thousand in salaries and employee benefits primarily related to bonuses to employees in recognition of their contribution to the successful execution of PPP, and - An increase of
$54 thousand in equipment and depreciation related to hardware and software purchases resulting from the efforts to deploy work-from-home capabilities for more of our employees, and - An increase of
$44 thousand in other noninterest expense primarily related to business development and other operating expenses.
Q3 2020 vs Q3 2019. Noninterest expense decreased
- A decrease of
$516 thousand in salaries and employee benefits primarily related to the staffing changes made at the bank during the second quarter of 2020; and - A decrease of
$423 thousand in our professional fees primarily related to higher legal and consulting fees during the third quarter of 2019 compared to lower legal and consulting fees in the third quarter of 2020 resulting from the cost reduction initiatives executed during the first quarter of 2020; partially offset by - An increase of
$390 thousand in FDIC expenses based on an increased average asset size that resulted from our participation in PPP versus receiving a rebate from the FDIC during the third quarter of 2019; and - An increase of
$102 thousand in equipment and depreciation related to hardware and software purchases resulting from the efforts to deploy work-from-home capabilities for more of our employees.
YTD 2020 vs YTD 2019. Noninterest expense decreased
- A decrease of
$847 thousand in our professional fees primarily related to higher legal and consulting fees during 2019; and - A decrease of
$162 thousand in salaries and employee benefits primarily related to the staffing changes made at the bank during the second quarter of 2020; partially offset by - An increase of
$436 thousand in FDIC expenses based on an increased average asset size that resulted from our participation in PPP versus receiving a rebate from the FDIC during the third quarter of 2019; and - An increase of
$120 thousand in equipment and depreciation related to hardware and software purchases resulting from the efforts to deploy work-from-home capabilities for more of our employees.
Income tax provision
For the three and nine months ended September 30, 2020, we had an income tax expense of
For the three and nine months ended September 30, 2019, we had an income tax expense of
Balance Sheet Information
Loans
As indicated in the table below, at September 30, 2020, gross loans totaled approximately
| September 30, 2020 | June 30, 2020 | December 31, 2019 | ||||||||||||||||||
| Amount | Percent of Total Loans | Amount | Percent of Total Loans | Amount | Percent of Total Loans | |||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| Commercial loans | $ | 614,737 | 48.1 | % | $ | 698,280 | 51.0 | % | $ | 409,420 | 36.2 | % | ||||||||
| Commercial real estate loans - owner occupied | 195,586 | 15.3 | % | 195,379 | 14.3 | % | 219,483 | 19.5 | % | |||||||||||
| Commercial real estate loans - all other | 199,911 | 15.6 | % | 203,330 | 14.8 | % | 208,283 | 18.5 | % | |||||||||||
| Residential mortgage loans - multi-family | 161,947 | 12.7 | % | 164,575 | 12.0 | % | 176,523 | 15.7 | % | |||||||||||
| Residential mortgage loans - single family | 13,764 | 1.1 | % | 15,522 | 1.1 | % | 18,782 | 1.7 | % | |||||||||||
| Construction and land development loans | 9,300 | 0.7 | % | 7,247 | 0.5 | % | 2,981 | 0.3 | % | |||||||||||
| Consumer loans | 83,736 | 6.5 | % | 85,414 | 6.3 | % | 90,867 | 8.1 | % | |||||||||||
| Gross loans | $ | 1,278,981 | 100.0 | % | $ | 1,369,747 | 100.0 | % | $ | 1,126,339 | 100.0 | % | ||||||||
The decrease of
During the third quarter of 2020, we secured new client relationships with commercial loan commitments of
Deposits
| September 30, 2020 | June 30, 2020 | December 31, 2019 | |||||||||
| Type of Deposit | (Dollars in thousands) | ||||||||||
| Noninterest-bearing checking accounts | $ | 661,462 | $ | 596,052 | $ | 397,000 | |||||
| Interest-bearing checking accounts | 139,425 | 110,707 | 108,941 | ||||||||
| Money market and savings deposits | 378,940 | 472,246 | 416,751 | ||||||||
| Certificates of deposit | 227,723 | 249,521 | 276,878 | ||||||||
| Totals | $ | 1,407,550 | $ | 1,428,526 | $ | 1,199,570 | |||||
The decrease in total deposits of
Asset Quality
Nonperforming Assets
| 2020 | 2019 | ||||||||||||||||||
| September 30 | June 30 | March 31 | December 31 | September 30 | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| Total nonperforming loans | $ | 16,780 | $ | 24,681 | $ | 20,021 | $ | 15,682 | $ | 13,209 | |||||||||
| Other nonperforming assets | 150 | 663 | 392 | 164 | 138 | ||||||||||||||
| Total nonperforming assets | $ | 16,930 | $ | 25,344 | $ | 20,413 | $ | 15,846 | $ | 13,347 | |||||||||
| 30-89 day past due loans | $ | 25,616 | $ | 7,175 | $ | 22,437 | $ | 2,779 | $ | 7,827 | |||||||||
| 90-day past due loans | $ | 9,893 | $ | 12,412 | $ | 3,765 | $ | 533 | $ | 86 | |||||||||
| Total classified assets | $ | 84,616 | $ | 83,104 | $ | 44,825 | $ | 37,192 | $ | 32,025 | |||||||||
| Allowance for loan and lease losses | $ | 17,485 | $ | 18,166 | $ | 17,520 | $ | 13,611 | $ | 12,086 | |||||||||
| Allowance for loan and lease losses /gross loans | 1.37 | % | 1.33 | % | 1.53 | % | 1.21 | % | 1.04 | % | |||||||||
| Allowance for loan and lease losses /total assets | 1.08 | % | 1.08 | % | 1.09 | % | 0.96 | % | 0.84 | % | |||||||||
| Ratio of allowance for loan and lease losses to nonperforming loans | 104.20 | % | 73.60 | % | 87.51 | % | 86.79 | % | 91.50 | % | |||||||||
| Ratio of nonperforming assets to total assets | 1.04 | % | 1.50 | % | 1.28 | % | 1.12 | % | 0.93 | % | |||||||||
| Net quarterly charge-offs to gross loans (annualized) | 0.21 | % | 0.65 | % | 0.81 | % | 0.78 | % | 0.51 | % | |||||||||
September 30, 2020 vs June 30, 2020. Nonperforming assets at September 30, 2020 decreased by
Our classified assets increased by
September 30, 2020 vs September 30, 2019. Nonperforming assets at September 30, 2020 increased by
Our classified assets increased by
Allowance for loan and lease losses
| 2020 | 2019 | ||||||||||||||||||
| September 30 | June 30 | March 31 | December 31 | September 30 | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| Balance at beginning of quarter | $ | 18,166 | $ | 17,520 | $ | 13,611 | $ | 12,086 | $ | 11,474 | |||||||||
| Charge offs | (840 | ) | (2,249 | ) | (2,314 | ) | (2,608 | ) | (1,551 | ) | |||||||||
| Recoveries | 159 | 45 | 23 | 383 | 63 | ||||||||||||||
| Provision | — | 2,850 | 6,200 | 3,750 | 2,100 | ||||||||||||||
| Balance at end of quarter | $ | 17,485 | $ | 18,166 | $ | 17,520 | $ | 13,611 | $ | 12,086 | |||||||||
At September 30, 2020, the allowance for loan and lease losses (“ALLL”) totaled
Capital Resources
At September 30, 2020, the Bank had total regulatory capital of
The following table sets forth the regulatory capital and capital ratios of the Bank at September 30, 2020, as compared to the regulatory requirements that must be met for a banking institution to be rated as a well-capitalized institution.
| Actual At September 30, 2020 | Federal Regulatory Requirement to be Rated Well-Capitalized | |||||||||||
| Amount | Ratio | Amount | Ratio | |||||||||
| (Dollars in thousands) | ||||||||||||
| Total Capital to Risk Weighted Assets | $ | 178,100 | 16.0 | % | $ | 111,425 | At least 10.0 | |||||
| Common Equity Tier 1 Capital to Risk Weighted Assets | $ | 164,124 | 14.7 | % | $ | 72,426 | At least 6.5 | |||||
| Tier 1 Capital to Risk Weighted Assets | $ | 164,124 | 14.7 | % | $ | 89,140 | At least 8.0 | |||||
| Tier 1 Capital to Average Assets | $ | 164,124 | 9.5 | % | $ | 86,750 | At least 5.0 | |||||
About Pacific Mercantile Bancorp
Pacific Mercantile Bancorp (Nasdaq: PMBC) is the parent holding company of Pacific Mercantile Bank, which opened for business March 1, 1999. The Bank, which is an FDIC insured, California state-chartered bank and a member of the Federal Reserve System, provides a wide range of commercial banking services to businesses, business professionals and individual clients. The Bank is headquartered in Orange County and operates a total of seven offices in Southern California, located in Orange, Los Angeles, San Diego, and San Bernardino counties. The Bank offers tailored flexible solutions for its clients including an array of loan and deposit products, sophisticated cash management services, and comprehensive online banking services accessible at www.pmbank.com.
Forward-Looking Information
This news release contains statements regarding our expectations, beliefs and views about our future financial performance and our business, trends and expectations regarding the markets in which we operate, and our future plans, including the credit exposure of certain loan products and other components of our business that could be impacted by the COVID-19 pandemic. Those statements, which include the quotation from management, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, can be identified by the fact that they do not relate strictly to historical or current facts. Often, they include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may”. Forward-looking statements are based on current information available to us and our assumptions about future events over which we do not have control. Moreover, our business and our markets are subject to a number of risks and uncertainties which could cause our actual financial performance in the future, and the future performance of our markets (which can affect both our financial performance and the market prices of our shares), to differ, possibly materially, from our expectations as set forth in the forward-looking statements contained in this news release.
In addition to the risk of incurring loan losses, which is an inherent risk of the banking business, these risks and uncertainties include, but are not limited to, the following: deteriorating economic conditions and macroeconomic factors such as unemployment rates and the volume of bankruptcies, as well as changes in monetary, fiscal or tax policy to address the impact of COVID-19, any of which could cause us to incur additional loan losses and adversely affect our results of operations in the future; the risk that the credit quality of our borrowers declines; potential declines in the value of the collateral for secured loans; the risk that steps we have taken to strengthen our overall credit administration are not effective; the risk that our interest margins and, therefore, our net interest income will be adversely affected by changes in prevailing interest rates; the risk that we will not succeed in further reducing our remaining nonperforming assets, in which event we would face the prospect of further loan charge-offs and write-downs of other real estate owned and would continue to incur expenses associated with the management and disposition of those assets; the risk that we will not be able to manage our interest rate risks effectively, in which event our operating results could be harmed; the prospect that government regulation of banking and other financial services organizations will increase, causing our costs of doing business to increase and restricting our ability to take advantage of business and growth opportunities; the risk that our efforts to develop a robust commercial banking platform may not succeed; and the risk that we may be unable to realize our expected level of increasing deposit inflows. Many of the foregoing risks and uncertainties are, and will be, exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result. Readers of this news release are encouraged to review the additional information regarding these and other risks and uncertainties to which our business is subject that are contained in our Annual Report on Form 10-K for the year ended December 31, 2019, and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020, each of which is on file with the Securities and Exchange Commission (the “SEC”). Additional information will be set forth in our Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2020, which we expect to file with the SEC during the fourth quarter of 2020, and readers of this release are urged to review the additional information that will be contained in that report.
Due to these and other risks and uncertainties to which our business is subject, you are cautioned not to place undue reliance on the forward-looking statements contained in this news release, which speak only as of its date, or to make predictions about our future financial performance based solely on our historical financial performance. We disclaim any obligation to update or revise any of the forward-looking statements as a result of new information, future events or otherwise, except as may be required by law.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars and numbers of shares in thousands, except per share data)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, 2020 | June 30, 2020 | September 30, 2019 | Sept '20 vs June '20 % Change | Sept '20 vs Sept '19 % Change | September 30, 2020 | September 30, 2019 | % Change | |||||||||||||
| Total interest income | $ | 16,016 | $ | 15,580 | $ | 16,767 | (4.5)% | $ | 46,364 | $ | 49,399 | (6.1)% | ||||||||
| Total interest expense | 1,762 | 2,262 | 4,024 | (22.1)% | (56.2)% | 7,320 | 12,387 | (40.9)% | ||||||||||||
| Net interest income | 14,254 | 13,318 | 12,743 | 39,044 | 37,012 | |||||||||||||||
| Provision for loan and lease losses | — | 2,850 | 2,100 | (100.0)% | (100.0)% | 9,050 | 5,400 | |||||||||||||
| Net interest income after provision for loan and lease losses | 14,254 | 10,468 | 10,643 | 29,994 | 31,612 | (5.1)% | ||||||||||||||
| Noninterest income: | ||||||||||||||||||||
| Service fees on deposits and other banking services | 891 | 625 | 463 | 2,038 | 1,303 | |||||||||||||||
| Net gain on sale of small business administration loans | 535 | — | 265 | —% | 535 | 866 | (38.2)% | |||||||||||||
| Net loss on sale of other assets | (70) | (53) | (6) | 1, | (117) | (42) | ||||||||||||||
| Other noninterest income | 889 | 599 | 620 | 2,054 | 2,092 | (1.8)% | ||||||||||||||
| Total noninterest income | 2,245 | 1,171 | 1,342 | 4,510 | 4,219 | |||||||||||||||
| Noninterest expense: | ||||||||||||||||||||
| Salaries and employee benefits | 5,554 | 5,462 | 6,070 | (8.5)% | 17,085 | 17,247 | (0.9)% | |||||||||||||
| Occupancy and equipment | 1,232 | 1,176 | 1,099 | 3,530 | 3,314 | |||||||||||||||
| Professional fees | 695 | 702 | 1,118 | (1.0)% | (37.8)% | 2,257 | 3,104 | (27.3)% | ||||||||||||
| OREO expenses, net | — | — | — | —% | —% | — | 69 | (100.0)% | ||||||||||||
| FDIC expense (credit) | 366 | 210 | (24) | (1,625.0)% | 769 | 333 | ||||||||||||||
| Other noninterest expense | 1,428 | 1,384 | 1,434 | (0.4)% | 4,284 | 4,321 | (0.9)% | |||||||||||||
| Total noninterest expense | 9,275 | 8,934 | 9,697 | (4.4)% | 27,925 | 28,388 | (1.6)% | |||||||||||||
| Income before income taxes | 7,224 | 2,705 | 2,288 | 6,579 | 7,443 | (11.6)% | ||||||||||||||
| Income tax expense | 2,138 | 800 | 658 | 1,948 | 2,204 | (11.6)% | ||||||||||||||
| Net income from continuing operations | 5,086 | 1,905 | 1,630 | 4,631 | 5,239 | (11.6)% | ||||||||||||||
| Net income | $ | 5,086 | $ | 1,905 | $ | 1,630 | $ | 4,631 | $ | 5,239 | (11.6)% | |||||||||
| Net income allocable to common shareholders | $ | 5,086 | $ | 1,905 | $ | 1,630 | $ | 4,631 | $ | 5,239 | (11.6)% | |||||||||
| Basic income per common share: | ||||||||||||||||||||
| Net income available to common shareholders | $ | 0.21 | $ | 0.08 | $ | 0.07 | $ | 0.20 | $ | 0.22 | (9.1)% | |||||||||
| Diluted income per common share: | ||||||||||||||||||||
| Net income available to common shareholders | $ | 0.21 | $ | 0.08 | $ | 0.07 | $ | 0.20 | $ | 0.22 | (9.1)% | |||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||||||
| Basic | 23,516 | 23,502 | 23,356 | 23,498 | 22,606 | |||||||||||||||
| Diluted | 23,720 | 23,713 | 23,657 | —% | 23,712 | 23,605 | ||||||||||||||
| Ratios from continuing operations(1): | ||||||||||||||||||||
| Return on average assets | ||||||||||||||||||||
| Return on average equity | ||||||||||||||||||||
| Efficiency ratio | ||||||||||||||||||||
____________________
(1) Ratios for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, and for the nine months ended September 30, 2020 and September 30, 2019, have been annualized.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except share and book value data)
(Unaudited)
| ASSETS | September 30, 2020 | December 31, 2019 | Increase/ (Decrease) | |||||||
| Cash and due from banks | $ | 16,957 | $ | 17,409 | (2.6)% | |||||
| Interest bearing deposits with financial institutions(1) | 261,323 | 202,729 | ||||||||
| Interest bearing time deposits | 1,847 | 2,420 | (23.7)% | |||||||
| Investment securities (including stock) | 35,536 | 36,254 | (2.0)% | |||||||
| Loans (net of allowances of | 1,263,367 | 1,117,511 | ||||||||
| Net deferred tax assets | 9,339 | 8,434 | ||||||||
| Intangible assets | 399 | 266 | ||||||||
| Other assets | 33,773 | 31,131 | ||||||||
| Total assets | $ | 1,622,541 | $ | 1,416,154 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| Noninterest bearing deposits | $ | 661,462 | $ | 397,000 | ||||||
| Interest bearing deposits | ||||||||||
| Interest checking | 139,425 | 108,941 | ||||||||
| Savings/money market | 378,940 | 416,751 | (9.1)% | |||||||
| Certificates of deposit | 227,723 | 276,878 | (17.8)% | |||||||
| Total interest bearing deposits | 746,088 | 802,570 | (7.0)% | |||||||
| Total deposits | 1,407,550 | 1,199,570 | ||||||||
| Other borrowings | 23,962 | 30,000 | (20.1)% | |||||||
| Other liabilities | 18,452 | 20,009 | (7.8)% | |||||||
| Junior subordinated debentures | 17,527 | 17,527 | —% | |||||||
| Total liabilities | 1,467,491 | 1,267,106 | ||||||||
| Shareholders’ equity | 155,050 | 149,048 | ||||||||
| Total Liabilities and Shareholders’ Equity | $ | 1,622,541 | $ | 1,416,154 | ||||||
| Book value per share | $ | 6.56 | $ | 6.32 | ||||||
| Shares outstanding, common | 23,644,111 | 23,573,529 | ||||||||
____________________
(1) Interest bearing deposits held in the Bank’s account maintained at the Federal Reserve Bank.
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA
(Dollars in thousands)
(Unaudited)
| Three Months Ended | ||||||||||||||||||||||||||||||||||||
| September 30, 2020 | June 30, 2020 | September 30, 2019 | ||||||||||||||||||||||||||||||||||
| Average Balance | Interest Earned/ Paid | Average Yield/ Rate | Average Balance | Interest Earned/ Paid | Average Yield/ Rate | Average Balance | Interest Earned/ Paid | Average Yield/ Rate | ||||||||||||||||||||||||||||
| Interest earning assets | ||||||||||||||||||||||||||||||||||||
| Short-term investments(1) | 349,716 | $ | 94 | 0.11 | % | $ | 322,023 | $ | 79 | 0.10 | % | $ | 263,219 | $ | 1,465 | 2.21 | % | |||||||||||||||||||
| Securities available for sale and stock(2) | 34,852 | 222 | 2.53 | % | 35,000 | 210 | 2.41 | % | 35,105 | 257 | 2.90 | % | ||||||||||||||||||||||||
| Loans(3) | 1,312,502 | 15,700 | 4.76 | % | 1,331,270 | 15,291 | 4.62 | % | 1,097,646 | 15,045 | 5.44 | % | ||||||||||||||||||||||||
| Total interest-earning assets | 1,697,070 | 16,016 | 3.75 | % | 1,688,293 | 15,580 | 3.71 | % | 1,395,970 | 16,767 | 4.77 | % | ||||||||||||||||||||||||
| Noninterest-earning assets | ||||||||||||||||||||||||||||||||||||
| Cash and due from banks | 19,058 | 16,622 | 16,551 | |||||||||||||||||||||||||||||||||
| All other assets | 23,443 | 28,048 | 25,295 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 1,739,571 | $ | 1,732,963 | $ | 1,437,816 | ||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||
| Interest-bearing checking accounts | $ | 110,934 | 28 | 0.10 | % | $ | 103,164 | 25 | 0.10 | % | $ | 111,614 | 163 | 0.58 | % | |||||||||||||||||||||
| Money market and savings accounts | 417,123 | 357 | 0.34 | % | 454,877 | 567 | 0.50 | % | 432,397 | 1,904 | 1.75 | % | ||||||||||||||||||||||||
| Certificates of deposit | 239,219 | 1,131 | 1.88 | % | 260,354 | 1,371 | 2.12 | % | 259,830 | 1,562 | 2.39 | % | ||||||||||||||||||||||||
| Other borrowings | 73,419 | 115 | 0.62 | % | 122,015 | 130 | 0.43 | % | 28,804 | 177 | 2.44 | % | ||||||||||||||||||||||||
| Junior subordinated debentures | 17,527 | 131 | 2.97 | % | 17,527 | 169 | 3.88 | % | 17,527 | 218 | 4.93 | % | ||||||||||||||||||||||||
| Total interest bearing liabilities | 858,222 | 1,762 | 0.82 | % | 957,937 | 2,262 | 0.95 | % | 850,172 | 4,024 | 1.88 | % | ||||||||||||||||||||||||
| Noninterest bearing liabilities | ||||||||||||||||||||||||||||||||||||
| Demand deposits | 709,391 | 606,481 | 421,524 | |||||||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 19,123 | 18,649 | 17,739 | |||||||||||||||||||||||||||||||||
| Shareholders' equity | 152,835 | 149,896 | 148,381 | |||||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 1,739,571 | $ | 1,732,963 | $ | 1,437,816 | ||||||||||||||||||||||||||||||
| Net interest income | $ | 14,254 | $ | 13,318 | $ | 12,743 | ||||||||||||||||||||||||||||||
| Net interest income/spread | 2.93 | % | 2.76 | % | 2.89 | % | ||||||||||||||||||||||||||||||
| Net interest margin | 3.34 | % | 3.17 | % | 3.62 | % | ||||||||||||||||||||||||||||||
____________________
- Short-term investments consist of federal funds sold and interest bearing deposits that we maintain at other financial institutions.
- Stock consists of FHLB stock and Federal Reserve Bank of San Francisco stock.
- Loans include the average balance of nonaccrual loans.
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA
(Dollars in thousands)
(Unaudited)
| Nine Months Ended | |||||||||||||||||||||
| September 30, 2020 | September 30, 2019 | ||||||||||||||||||||
| Average Balance | Interest Earned/ Paid | Average Yield/ Rate | Average Balance | Interest Earned/ Paid | Average Yield/ Rate | ||||||||||||||||
| Interest earning assets | |||||||||||||||||||||
| Short-term investments(1) | $ | 297,636 | $ | 894 | 0.40 | % | $ | 253,058 | $ | 4,439 | 2.35 | % | |||||||||
| Securities available for sale and stock(2) | 35,231 | 693 | 2.63 | % | 37,047 | 808 | 2.92 | % | |||||||||||||
| Loans(3) | 1,253,805 | 44,777 | 4.77 | % | 1,080,278 | 44,152 | 5.46 | % | |||||||||||||
| Total interest-earning assets | 1,586,672 | 46,364 | 3.90 | % | 1,370,383 | 49,399 | 4.82 | % | |||||||||||||
| Noninterest-earning assets | |||||||||||||||||||||
| Cash and due from banks | 17,490 | 15,741 | |||||||||||||||||||
| All other assets | 25,540 | 26,845 | |||||||||||||||||||
| Total assets | 1,629,702 | 1,412,969 | |||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||
| Interest-bearing checking accounts | $ | 105,837 | $ | 141 | 0.18 | % | $ | 105,265 | $ | 505 | 0.64 | % | |||||||||
| Money market and savings accounts | 429,133 | 2,221 | 0.69 | % | 450,342 | 6,123 | 1.82 | % | |||||||||||||
| Certificates of deposit | 258,469 | 4,082 | 2.11 | % | 264,557 | 4,377 | 2.21 | % | |||||||||||||
| Other borrowings | 76,342 | 378 | 0.66 | % | 36,300 | 698 | 2.57 | % | |||||||||||||
| Junior subordinated debentures | 17,527 | 498 | 3.80 | % | 17,527 | 684 | 5.22 | % | |||||||||||||
| Total interest bearing liabilities | 887,308 | 7,320 | 1.10 | % | 873,991 | 12,387 | 1.89 | % | |||||||||||||
| Noninterest bearing liabilities | |||||||||||||||||||||
| Demand deposits | 571,976 | 374,713 | |||||||||||||||||||
| Accrued expenses and other liabilities | 19,159 | 18,837 | |||||||||||||||||||
| Shareholders' equity | 151,259 | 145,428 | |||||||||||||||||||
| Total liabilities and shareholders' equity | 1,629,702 | 1,412,969 | |||||||||||||||||||
| Net interest income | $ | 39,044 | $ | 37,012 | |||||||||||||||||
| Net interest income/spread | 2.80 | % | 2.93 | % | |||||||||||||||||
| Net interest margin | 3.29 | % | 3.61 | % | |||||||||||||||||
____________________
- Short-term investments consist of federal funds sold and interest bearing deposits that we maintain at other financial institutions.
- Stock consists of FHLB stock and Federal Reserve Bank of San Francisco stock.
- Loans include the average balance of nonaccrual loans.
For more information contact
Curt Christianssen, Chief Financial Officer, 714-438-2500
FAQ
What was Pacific Mercantile Bancorp's net income for Q3 2020 (PMBC)?
How much did net interest income increase by in Q3 2020 for PMBC?
What contributed to the rise in noninterest income for PMBC in Q3 2020?
How did PMBC's non-performing loans change in Q3 2020?
What was the change in total deposits for PMBC in Q3 2020?
