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8-K - FORM 8-K - CIM Commercial Trust Corp | c21184e8vk.htm |
Exhibit 99.1
FOR IMMEDIATE PRESS RELEASE
FOR:
|
PMC Commercial Trust | CONTACT: | Investor Relations | |||||
17950 Preston Road, Suite 600 | 972-349-3235 | |||||||
Dallas, TX 75252 | www.pmctrust.com |
PMC Commercial Trust Announces Second Quarter and Year-to-Date Financial Results
PMC Commercial Trust
NYSE Amex (Symbol PCC)
www.pmctrust.com
NYSE Amex (Symbol PCC)
www.pmctrust.com
Dallas, TX | August 9, 2011 |
PMC Commercial Trust (NYSE Amex: PCC) announced second quarter and year-to-date financial
results today.
Our income from continuing operations during the second quarter of 2011 was $1,235,000 ($0.12
per share) which is our 70th consecutive quarterly profit since commencing operations in
December 1993. These earnings represented a 0.7% increase from our second quarter 2010 income from
continuing operations of $1,226,000 ($0.12 per share) and a 9.9% increase from our first quarter
2011 income from continuing operations of $1,124,000 ($0.11 per share). Our 2011 year-to-date
income from continuing operations decreased to $2,359,000 ($0.22 per share) from $2,493,000 ($0.24
per share) during the six months ended June 30, 2010, representing a 5.4% decrease.
Management Remarks
Lance B. Rosemore, Chairman of the Board of Trust Managers, stated, We are pleased to report
our 70th consecutive profitable quarter. While earnings continue to be impacted by the
continued low level of interest rates, approximately 80% of our portfolio yield is tied to variable
rates which can provide us with substantial upside revenue potential when rates rise.
We are all aware of how the economy has affected business over the last several years.
Despite this challenging economic environment, we have created value through patient management of
our commercial real estate loan portfolio. By being proactive in identification of problematic
situations, we have created solutions which enabled PMC to strengthen collateral positions while
not compromising principal recoveries. When foreclosure and resale have become our only
alternative, weak commercial property demand has hampered our efforts to sell our REO.
As our portfolio is predominantly comprised of loans to hospitality operators, we are
reassured by recent lodging industry forecasts which anticipate continued positive trends.
However, we are anticipating that it will be a slow recovery for the hospitality industry. We are
optimistic that these trends will continue and 2011 will be a year of positive portfolio
performance.
As a result of the continued lack of liquidity in the marketplace, we are maintaining our
emphasis on SBA 7(a) lending. In addition, we received commitments for $15 million of SBIC
debentures. Combined with the recent amendment to our revolving credit facility, we now have more
flexibility in the loan programs we are able to offer. While we delayed committing to non-SBA 7(a)
loan fundings until these liquidity sources were in place, resulting in a light volume for the
first half of 2011, we continue to anticipate $40 million to $50 million of fundings in 2011.
PMC COMMERCIAL TRUST | Earnings Press Release | August 9, 2011 |
Interest Rate Sensitivity
| Approximately 80% of our retained loans at June 30, 2011 were variable rate (60% LIBOR
based and 20% prime rate based). |
| LIBOR and prime rates have remained stable since the beginning of 2010. |
Financial Position
| Our total assets remained relatively unchanged at $252.8 million at June 30, 2011
compared to $252.1 million at December 31, 2010 and $257.4 million at June 30, 2010. |
| Our retained loan portfolio remained relatively unchanged at $234.1 million at June 30,
2011 compared to $234.9 million at December 31, 2010 and $239.2 million as of June 30,
2010. |
| Our serviced loan portfolio increased slightly to $287.5 million at June 30, 2011
compared to $284.5 million at December 31, 2010. |
Portfolio Information
| During the six month ended June 30, 2011, we originated $12.9 million of SBA 7(a) loans
compared to $22.7 million during the first six months of 2010. |
| Our pipeline of outstanding loan commitments was $18.7 million at June 30, 2011 compared
to $16.5 million at December 31, 2010. |
| We anticipate our 2011 fundings to be between $40 million and $50 million. |
| Our loan loss reserves have been increased and were $1,860,000 at June 30, 2011 compared
to $1,609,000 at December 31, 2010 and $1,200,000 at June 30, 2010. |
Liquidity
| Our $30 million revolving credit facility was amended and as extended matures on June
30, 2014. Borrowings under the facility are now unsecured. The interest rate was reduced
by 50 basis points to prime less 50 basis points or the 30 day LIBOR plus 2%, at our
option. |
| The total amount available under the facility of initially $30 million is subject to
increase as follows: (1) on January 1, 2012, the $30 million would automatically increase
by $5 million to $35 million and (2) on January 1, 2013, the $30 million or $35 million (as
applicable at the time) would automatically increase by $5 million to $35 million or $40
million, as applicable, provided there is no event of default or potential default on these
dates and the non-performing loan ratio, as defined, is not more than 20% on these dates. |
| During June 2011 we received commitments from the SBA for $15 million in SBIC
debentures. We are currently marketing SBIC loans and anticipate drawing down these
debentures, subject to SBA approval, as these loans are funded. |
Modified Cash
As a REIT, our earnings are typically used to fund our dividends. Since operating cash flows
also include lending activities, it is necessary to adjust our cash flow from operating activities
for our lending activities to determine coverage of our dividends from operations. Therefore, we
adjust net cash flow from operating activities to Modified Cash. Management believes that our
modified cash available for dividend distributions (Modified Cash) is a more appropriate
indicator of operating cash coverage of our dividend payments than cash flow from operating
activities. Modified Cash is calculated by adjusting our cash flow from operating activities by
(1) the change in operating assets and liabilities and (2) loans funded, held for sale, net of
proceeds from sale of guaranteed loans and principal collected on loans (Operating Loan
Activity). Modified Cash is
one of the measurements used by our Board of Trust Managers in its determination of dividends and
their timing. In respect to our dividend policy, we believe that the disclosure of Modified Cash
adds additional transparency to our dividend calculation and intentions. However, Modified Cash
may differ significantly from dividends paid due to timing differences between book income and
taxable income and timing of payment of dividends to eliminate or reduce Federal income taxes or
excise taxes at the REIT level.
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PMC COMMERCIAL TRUST | Earnings Press Release | August 9, 2011 |
The following reconciles net cash used in operating activities to Modified Cash:
Six Months Ended | ||||||||
June 30, | ||||||||
2011 | 2010 | |||||||
(In thousands) | ||||||||
Net cash used in operating activities |
$ | (2,645 | ) | $ | (15,773 | ) | ||
Change in operating assets and liabilities |
872 | (1,166 | ) | |||||
Operating Loan Activity |
4,728 | 19,826 | ||||||
Modified Cash |
$ | 2,955 | $ | 2,887 | ||||
Dividends
| In 2011, regular quarterly dividends on our common shares of $0.16 per share were
declared in both March and June and paid in April and July. |
| Since inception in 1993, we have paid $174.4 million in dividends or $23.48 per common
share. |
Financial Position Information
June 30, | March 31, | Dec. 31, | Sept. 30, | June 30, | ||||||||||||||||
2011 | 2011 | 2010 | 2010 | 2010 | ||||||||||||||||
(In thousands, except per share information) | ||||||||||||||||||||
Loans receivable, net |
$ | 232,292 | $ | 233,443 | $ | 233,218 | $ | 231,326 | $ | 237,882 | ||||||||||
Total assets |
$ | 252,801 | $ | 251,580 | $ | 252,127 | $ | 250,523 | $ | 257,372 | ||||||||||
Debt |
$ | 95,510 | $ | 93,447 | $ | 92,969 | $ | 90,881 | $ | 97,045 | ||||||||||
Total equity |
$ | 149,652 | $ | 149,881 | $ | 150,560 | $ | 151,623 | $ | 151,897 | ||||||||||
Shares outstanding |
10,575 | 10,570 | 10,560 | 10,560 | 10,558 | |||||||||||||||
Net asset value per share |
$ | 14.15 | $ | 14.18 | $ | 14.26 | $ | 14.36 | $ | 14.39 |
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PMC COMMERCIAL TRUST | Earnings Press Release | August 9, 2011 |
PMC Commercial Trust and Subsidiaries
Comparative Results of Operations
Comparative Results of Operations
Six Months Ended June 30, | ||||||||||||
2011 | 2010 | Inc (Dec) % | ||||||||||
(Dollars in thousands, except per share information) | ||||||||||||
Income: |
||||||||||||
Interest income |
$ | 6,756 | $ | 6,715 | 1 | % | ||||||
Other income |
1,147 | 675 | 70 | % | ||||||||
Total revenues |
7,903 | 7,390 | 7 | % | ||||||||
Expenses: |
||||||||||||
Interest |
1,930 | 2,000 | (4 | %) | ||||||||
Salaries and related benefits |
2,216 | 1,911 | 16 | % | ||||||||
General and administrative |
1,048 | 1,212 | (14 | %) | ||||||||
Provision for (reduction of) loan losses, net |
379 | (98 | ) | (487 | %) | |||||||
Total expenses |
5,573 | 5,025 | 11 | % | ||||||||
Income before income tax benefit
and discontinued operations |
2,330 | 2,365 | (1 | %) | ||||||||
Income tax benefit |
29 | 128 | (77 | %) | ||||||||
Income from continuing operations |
2,359 | 2,493 | (5 | %) | ||||||||
Discontinued operations |
(104 | ) | 8 | NM | ||||||||
Net income |
$ | 2,255 | $ | 2,501 | (10 | %) | ||||||
Basic weighted average shares outstanding |
10,566 | 10,549 | ||||||||||
Basic and diluted earnings per share: |
||||||||||||
Income from continuing operations |
$ | 0.22 | $ | 0.24 | ||||||||
Discontinued operations |
(0.01 | ) | | |||||||||
Net income |
$ | 0.21 | $ | 0.24 | ||||||||
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PMC COMMERCIAL TRUST | Earnings Press Release | August 9, 2011 |
PMC Commercial Trust and Subsidiaries
Quarterly Operating Results
Quarterly Operating Results
Three Months Ended | ||||||||||||||||||||
June 30, | March 31, | Dec. 31, | Sept. 30, | June 30, | ||||||||||||||||
2011 | 2011 | 2010 | 2010 | 2010 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Revenues: |
||||||||||||||||||||
Interest income |
$ | 3,389 | $ | 3,367 | $ | 3,339 | $ | 3,483 | $ | 3,498 | ||||||||||
Other income |
458 | 689 | 431 | 820 | 437 | |||||||||||||||
Total revenues |
3,847 | 4,056 | 3,770 | 4,303 | 3,935 | |||||||||||||||
Expenses: |
||||||||||||||||||||
Interest |
957 | 973 | 974 | 1,042 | 1,011 | |||||||||||||||
Salaries and related benefits |
1,099 | 1,117 | 1,030 | 986 | 970 | |||||||||||||||
General and administrative |
544 | 504 | 506 | 450 | 644 | |||||||||||||||
Provision for loan losses |
66 | 313 | 252 | 487 | 104 | |||||||||||||||
Total expenses |
2,666 | 2,907 | 2,762 | 2,965 | 2,729 | |||||||||||||||
Income before income tax benefit
(provision) and
discontinued operations |
1,181 | 1,149 | 1,008 | 1,338 | 1,206 | |||||||||||||||
Income tax benefit (provision) |
54 | (25 | ) | 99 | (96 | ) | 20 | |||||||||||||
Income from continuing operations |
1,235 | 1,124 | 1,107 | 1,242 | 1,226 | |||||||||||||||
Discontinued operations |
104 | (208 | ) | (518 | ) | (35 | ) | (3 | ) | |||||||||||
Net income |
$ | 1,339 | $ | 916 | $ | 589 | $ | 1,207 | $ | 1,223 | ||||||||||
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PMC COMMERCIAL TRUST | Earnings Press Release | August 9, 2011 |
Taxable Income
REIT Taxable Income:
REIT taxable income is presented to assist investors in analyzing our performance and is a measure
that is presented quarterly in our consolidated financial statements and is one of the factors
utilized by our Board of Trust Managers in determining the level of dividends to be paid to our
shareholders.
The following reconciles net income to REIT taxable income:
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands) | ||||||||||||||||
Net income |
$ | 1,339 | $ | 1,223 | $ | 2,255 | $ | 2,501 | ||||||||
Book/tax difference on gains related
to real estate |
(683 | ) | (2 | ) | (235 | ) | 387 | |||||||||
Book/tax difference on amortization
and accretion |
(17 | ) | (25 | ) | (33 | ) | (51 | ) | ||||||||
Loan valuation |
(41 | ) | (361 | ) | 147 | (558 | ) | |||||||||
Impairment losses |
209 | | 209 | | ||||||||||||
Other book/tax differences, net |
4 | (100 | ) | 34 | (154 | ) | ||||||||||
Subtotal |
811 | 735 | 2,377 | 2,125 | ||||||||||||
Adjustment for TRS net loss, net of tax |
128 | 60 | 100 | 293 | ||||||||||||
REIT taxable income |
$ | 939 | $ | 795 | $ | 2,477 | $ | 2,418 | ||||||||
Distributions declared |
$ | 1,692 | $ | 1,690 | $ | 3,383 | $ | 3,378 | ||||||||
Weighted average common shares outstanding |
10,571 | 10,550 | 10,566 | 10,549 | ||||||||||||
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PMC COMMERCIAL TRUST | Earnings Press Release | August 9, 2011 |
Combined Taxable Income:
Primarily as a result of the timing differences for gain recognition on Secondary Market Loan
Sales, our combined REIT taxable income and TRSs taxable income (net of current income tax
expense) is materially different than our net income. The following table reconciles our net
income to our Adjusted Taxable Income, Net of Current Tax Expense:
Six Months Ended June 30, 2011 | ||||||||||||
Combined | REIT | TRSs | ||||||||||
(In thousands, except footnotes) | ||||||||||||
Net income (loss) |
$ | 2,255 | $ | 2,355 | $ | (100 | ) | |||||
Book vs. tax timing differences |
815 | 122 | 693 | (1) | ||||||||
Taxable income |
3,070 | 2,477 | 593 | |||||||||
Special item (2) |
(448 | ) | (448 | ) | | |||||||
Taxable Income, adjusted for special item |
2,622 | 2,029 | 593 | |||||||||
Current income tax expense |
(202 | ) | | (202 | ) | |||||||
Adjusted Taxable Income, Net of Current
Tax Expense |
$ | 2,420 | $ | 2,029 | $ | 391 | ||||||
Six Months Ended June 30, 2010 | ||||||||||||
Combined | REIT | TRSs | ||||||||||
(In thousands, except footnotes) | ||||||||||||
Net income (loss) |
$ | 2,501 | $ | 2,794 | $ | (293 | ) | |||||
Book vs. tax timing differences |
1,011 | (376 | ) | 1,387 | (1) | |||||||
Taxable income |
3,512 | 2,418 | 1,094 | |||||||||
Current income tax expense |
(374 | ) | | (374 | ) | |||||||
Adjusted Taxable Income, Net of Current
Tax Expense |
$ | 3,138 | $ | 2,418 | $ | 720 | ||||||
(1) | Includes $690,000 and $1,858,000 of timing differences during 2011 and 2010, respectively,
related primarily to Secondary Market Loan Sales. |
|
(2) | Recognition of deferred gain for tax purposes on the property previously owned by our
off-balance sheet variable interest entity. |
Adjusted Taxable Income, Net of Current Tax Expense is defined as reported net income,
adjusted for book versus tax timing differences and special items. Special items may include, but
are not limited to, unusual and infrequent non-operating items. We use Adjusted Taxable Income,
Net of Current Tax Expense to measure and evaluate our operations. We believe that the results
provide a useful analysis of ongoing operating trends.
Forward Looking Statements
Certain matters discussed in this press release are forward-looking statements intended to
qualify for the safe harbors from liability established by the Private Securities Litigation
Reform Act of 1995. These forward-looking statements can generally be identified as such because
the context of the statement will include words such as the Company expects, anticipates or
words of similar import. Similarly, statements that describe the Companys future plans,
objectives or goals are also forward-looking statements. Such forward-looking statements are
subject to certain risks and uncertainties, including the financial performance of the Company,
real estate conditions and market valuations of its shares, which could cause actual results to
differ materially from those currently anticipated. The Companys ability to meet targeted
financial and operating results, including loan originations, operating income, net income and
earnings per share depends on a variety of economic, competitive, and governmental factors,
including changes in real estate market conditions, changes in interest rates and the Companys
ability to access capital under its credit facility or otherwise, many of which are beyond the
Companys control and which are described in the companys filings with the Securities and
Exchange Commission. Although the Company believes the expectations reflected in any
forward-looking statements are based on reasonable assumptions, the Company can give no assurance
that its expectations will be attained. Shareholders, potential investors and other readers are
urged to consider these factors carefully in evaluating the forward-looking statements. The
forward-looking statements made herein are only made as of the date of this press release and the
Company undertakes no obligation to publicly update such forward-looking statements to reflect
any changes in expectations, subsequent events or circumstances.
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