PACIFIC CONTINENTAL CORP - FORM 8-K - EX-99.1 - PRESS RELEASE DATED OCTOBER 17, 2011

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8-K - FROM 8-K - PACIFIC CONTINENTAL CORP	d245019d8k.htm
EX-99.2 - TRANSCRIPT OF WEBCAST DATED OCTOBER 18, 2011 - PACIFIC CONTINENTAL CORP	d245019dex992.htm

Exhibit 99.1

NEWS RELEASE


FOR MORE INFORMATION CONTACT:	Hal Brown	Mick Reynolds
	CEO	Executive Vice President/CFO
	541 686-8685	541 686-8685

	http://www.therightbank.com
	Email: banking@therightbank.com

FOR IMMEDIATE RELEASE

Pacific Continental Corporation Reports Third Quarter 2011 Results

Earnings Growth Continues; Improvements in Core Fundamentals Drives Profitability.

EUGENE, Ore., October 17, 2011 – Pacific Continental Corporation (Nasdaq: PCBK), the holding company of Pacific Continental Bank, today reported financial results for the third quarter ended September 30, 2011.

Recent highlights:

•

Net income for the third quarter up 125% over third quarter last year.

•

Provision for loan losses reduced for the ninth consecutive quarter.

•

Significant reductions in nonperforming and classified assets.

•

Achieved 6.1% year-to-date growth in the commercial loan portfolio.

•

Announced increase in third quarter 2011 cash dividend to shareholders.

•

Total risk-based capital ratio of 18.89%, significantly above the 10.0% minimum for “well-capitalized” designation.

Net income for the third quarter 2011 was $2.6 million, up 125% over net income of $1.2 million for the third quarter 2010; and on a linked-quarter basis, net income was up $431 thousand from the second quarter 2011. Earnings per diluted share were $0.14 for the third quarter 2011, compared to $0.06 and $0.12 for the third quarter 2010 and second quarter 2011, respectively.

“We are pleased with the improving fundamentals and the resultant increase in our earnings,” said Hal Brown, chief executive officer. “I am particularly pleased with the growth in our commercial loan portfolio and our improving loan and deposit pipelines, which suggest continued improvement in future quarters,” added Brown.

Classified assets, provisioning and loan statistics

Classified assets continued a five-quarter trend of decline, and at September 30, 2011, totaled $81.0 million, a decrease of $45.2 million from a year ago and a decline of $28.8 million from December 31, 2010. Nonperforming assets, a subcategory of classified assets, totaled $44.5 million at September 30, 2011, or 3.56% of total assets, a decrease of $12.0 million for the third quarter. The decrease included the resolution of a number of problem assets during the quarter, including the $5.8 million sale of the largest property in other real estate owned resulting in a small gain on the sale.

“We are pleased with the current trends and continued reduction in the level of classified and problem assets,” said Roger Busse, president and chief operating officer. “While in this uncertain economic environment we may experience some future volatility in the level of our nonperforming assets, we believe we will continue to see reductions in our level of classified assets during the remainder of the year and into 2012,” added Busse.

Loans past-due 30-89 days (excluding nonaccrual loans) were 0.59% of total loans at September 30, 2011, a slight increase from 0.51% at June 30, 2011. This represents the ninth consecutive quarter in which this ratio was near or below one percent, a trend that suggests stabilization in the migration of problem loans.

The Company’s third quarter 2011 provision for loan losses was $1.8 million, down from $3.8 million a year ago and down from $2.0 million in the second quarter 2011. While the provision remains elevated when compared to pre-recession periods, it has been trending down over the past nine quarters. During the third quarter of 2011, the Company recognized net loan charge-offs of $1.8 million, down from the $1.9 million recorded in the second quarter 2011. The allowance for loan losses as a percentage of outstanding loans at September 30, 2011, was 1.85%, compared to 1.93% and 2.01% at December 31, 2010, and September 30, 2010, respectively.

Core deposit growth continues and commercial loan activity strengthens

Outstanding commercial loans have increased $14.9 million or 6.1% during the first nine months of 2011 and are up $15.0 million or 6.2% over outstanding commercial loans at September 30, 2010. This growth continues to validate the Company’s business model and focused strategy on meeting the credit needs of community-based businesses, nonprofit organizations, health care and professional service providers. Outstanding loans at September 30, 2011, were $828.5 million, down $1.8 million from the end of second quarter 2011 and down $54.4 million from one year ago. While period-end net loans declined during the third quarter due to a contraction in the real estate portfolio, the decline was the smallest of any of the last ten quarters. During the month of September 2011, the Company experienced its first monthly increase in more than two years as outstanding loans grew by $2.6 million over the prior month-end. With loan pipelines strengthening, this suggests the potential for net loan growth in future quarters.

Period-end core deposits contracted during the third quarter by $11.3 million from the end of second quarter 2011, primarily due to volatility in a large deposit relationship. Average core deposits, a measure which reduces the daily deposit volatility, showed an increase of $5.7 million over second quarter 2011 and a $40.6 million or 5.0% increase over third quarter 2010.

Capital levels

The Company’s capital ratios continue to be well above the minimum FDIC well-capitalized designated levels. At September 30, 2011, the Company’s Tier 1 leverage ratio, Tier 1 risk-based capital ratio, and Total risk-based capital ratio were 13.48%, 17.64% and 18.89%% as compared to 13.38%, 15.86% and 17.10% at December 31, 2010. The FDIC’s minimum well-capitalized designation ratios are 5.00%, 6.00% and 10.00%, respectively.

Net interest margin

The net interest margin for the current quarter was 4.56%, down 2 basis points from the 4.58% margin reported for second quarter 2011, and down 14 basis points from the 4.70% margin reported for third quarter 2010. The net interest margin for the current period and all prior periods has been adjusted to a tax-equivalent basis using a 35% tax rate. The linked-quarter decline in the net interest margin was primarily attributable to an increase in the lower yielding securities portfolio, combined with an additional $66 thousand charge to interest expense related to the discount on a brokered time deposit that was called during the quarter.

The sustained growth in average core deposits continued to result in additions to the securities portfolio. The securities portfolio grew by $32.6 million during the third quarter 2011 and represented 27% of total assets versus 18% of total assets one year ago. This increase in the securities portfolio, which has significantly lower yields than loans, is a primary contributor to the decline in the net interest margin.

Noninterest income and expense

Noninterest income in third quarter 2011 was up $542 thousand over the same quarter last year. Most of this increase was attributable to $359 thousand in gains on the sale of securities and $140 thousand of rental income on other real estate owned recorded during third quarter 2011. Merchant bankcard fees continued to experience year-over-year growth as evidenced by the 4% increase in this category. The increase in bankcard fees is reflective of both improving volumes and increased margins. On a linked-quarter basis and excluding gains on the sale of securities in both quarters and the one-time other real estate income, third quarter 2011 noninterest income showed a slight improvement over second quarter 2011.

Noninterest expense in third quarter 2011 was up $736 thousand over third quarter 2010, but down slightly on a linked-quarter basis. The year-over-year increase was primarily attributable to increased personnel expense. Personnel expense increased $620 thousand primarily due to staff additions to line units that will poise the Company for growth in future quarters. Increases in other expense categories were mostly offset by a decline in FDIC assessments as the new assessment methodology was implemented in second quarter 2011.

Conference call and audio webcast:

Management will conduct a live conference call and audio webcast for interested parties relating to the Company’s results for the third quarter 2011 on Tuesday, October 18, 2011, at 11:00 a.m. Pacific Time / 2:00 p.m. Eastern Time. To listen to the conference call, interested parties should call (866) 292-1418. The webcast will be available via Pacific Continental’s website (http://www.therightbank.com/). To listen to the live audio webcast, click on the webcast presentation link on the Company’s home page a few minutes before the presentation is scheduled to begin. An audio webcast replay is typically available within twenty-four hours following the live webcast and will be archived for one year on the Pacific Continental website. Any questions regarding the conference call presentation or webcast should be directed to Maecey Castle, vice president and director of corporate communications, at (541) 686-8685.

About Pacific Continental Bank

Pacific Continental Bank, the operating subsidiary of Pacific Continental Corporation, delivers highly personalized services through fourteen banking offices in Oregon and Washington. The Bank also operates a loan production office in Tacoma, Washington. Pacific Continental, with $1.3 billion in assets, has established one of the most unique and attractive metropolitan branch networks in the Pacific Northwest with offices in three of the region’s largest markets including Seattle, Portland and Eugene. Pacific Continental targets the banking needs of community-based businesses, health care professionals, professional service providers and nonprofit organizations.

Since its founding in 1972, Pacific Continental Bank has been honored with numerous awards and recognitions from highly regarded third-party organizations including The Seattle Times, the Portland Business Journal and Oregon Business magazine. A complete list of the company’s awards and recognitions – as well as supplementary information about Pacific Continental Bank – can be found online at www.therightbank.com. Pacific Continental Corporation’s shares are listed on the Nasdaq Global Select Market under the symbol “PCBK” and are a component of the Russell 2000 Index.

Forward-Looking Statement Safe Harbor

This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). Such forward-looking statements include but are not limited to statements about future levels of classified assets and suggested future loan growth, and are subject to risks and uncertainties that may cause actual results to differ materially from those projected, including but not limited to the following: the high concentration of loans of the company’s banking subsidiary in commercial and residential real estate lending; adverse economic trends in the United States and the markets we serve affecting the Bank’s borrower base; a continued decline in the housing and real estate market; a continued increase in unemployment or sustained high levels of unemployment; continued erosion or sustained low levels of consumer confidence; changes in the regulatory environment and increases in associated costs, particularly ongoing compliance expenses and resource allocation needs; vendor quality and efficiency; the company’s ability to control risks associated with rapidly changing technology both from an internal perspective as well as for external providers; increased competition among financial institutions; fluctuating interest rate environments; a tightening of available credit and other risks and uncertainties discussed in the sections titled “Risk Factors”, “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, as applicable, from Pacific Continental’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. Readers are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date on which they are made and reflect management’s current estimates, projections, expectations and beliefs. Pacific Continental Corporation undertakes no obligation to publicly revise or update the forward-looking statements to reflect events or circumstances that arise after the date of this release. This statement is included for the express purpose of invoking PSLRA’s safe harbor provisions.

PACIFIC CONTINENTAL CORPORATION

Consolidated Income Statements

(In thousands, except share and per share amounts)

(Unaudited)


	Three months ended						Nine months ended
	September 30, 2011			September 30, 2010			September 30, 2011			September 30, 2010
Interest and dividend income
Loans	$	12,583		$	14,070		$	38,146		$	43,233
Securities		2,415			1,791			6,710			4,745
Federal funds sold & interest-bearing deposits with banks		1			3			5			6

		14,999			15,864			44,861			47,984

Interest expense
Deposits		1,628			2,395			5,325			7,069
Federal Home Loan Bank & Federal Reserve borrowings		459			563			1,412			1,788
Junior subordinated debentures		34			133			99			393
Federal funds purchased		11			15			32			39

		2,132			3,106			6,868			9,289

Net interest income		12,867			12,758			37,993			38,695
Provision for loan losses		1,750			3,750			5,900			11,750

Net interest income after provision for loan losses		11,117			9,008			32,093			26,945

Noninterest income
Service charges on deposit accounts		462			418			1,328			1,247
Other fee income, principally bankcard		402			385			1,207			1,078
Loan servicing fees		27			31			82			63
Mortgage banking income		50			69			124			144
Gain on sale of investment securities		359			—			825			45
Impairment losses on investment securities (OTTI)		—			—			—			(226	)
Other noninterest income		431			286			981			806

		1,731			1,189			4,547			3,157

Noninterest expense
Salaries and employee benefits		4,691			4,071			14,136			13,054
Premises and equipment		861			909			2,605			2,580
Bankcard processing		155			131			472			424
Business development		350			225			1,132			931
FDIC insurance assessment		381			491			1,268			1,477
Other real estate expense		734			803			2,146			904
Other noninterest expense		1,752			1,558			5,531			4,934

		8,924			8,188			27,290			24,304

Income before provision for income taxes		3,924			2,009			9,350			5,798
Provision for income taxes		1,336			857			3,156			1,897

Net income	$	2,588		$	1,152		$	6,194		$	3,901

Earnings per share:
Basic	$	0.14		$	0.06		$	0.34		$	0.21

Diluted	$	0.14		$	0.06		$	0.34		$	0.21

Weighted average shares outstanding:
Basic		18,433,084			18,399,442			18,425,344			18,396,990
Common stock equivalents attributable to stock-based awards		15,871			16,161			18,637			18,620

Diluted		18,448,955			18,415,603			18,443,981			18,415,610

PERFORMANCE RATIOS
Return on average assets		0.83	%		0.38	%		0.68	%		0.44	%
Return on average equity (book)		5.74	%		2.66	%		4.71	%		3.07	%
Return on average equity (tangible) ⁽¹⁾		6.56	%		3.06	%		5.40	%		3.54	%
Net interest margin ⁽²⁾		4.56	%		4.70	%		4.61	%		4.77	%
Efficiency ratio ⁽³⁾		61.13	%		58.71	%		64.15	%		58.07	%

⁽¹⁾	Tangible equity excludes goodwill and core deposit intangible assets related to acquisitions.

⁽²⁾	Net interest margin is reported on a tax-equivalent yield basis at a 35% tax rate.

⁽³⁾	Efficiency ratio is noninterest expense divided by operating revenues. Operating revenues are net interest income plus noninterest income.

PACIFIC CONTINENTAL CORPORATION

Consolidated Balance Sheets

(In thousands, except share amounts)

(Unaudited)


	September 30, 2011			December 31, 2010			September 30, 2010
ASSETS
Cash and due from banks	$	16,896		$	25,424		$	18,424
Interest-bearing deposits with banks		69			267			269

Total cash and cash equivalents		16,965			25,691			18,693
Securities available-for-sale		340,118			253,907			215,259
Loans held-for-sale		400			2,116			1,397
Loans, less allowance for loan losses and net deferred fees		812,525			839,815			864,604
Interest receivable		4,243			4,371			4,247
Federal Home Loan Bank stock		10,652			10,652			10,652
Property and equipment, net of accumulated depreciation		20,379			20,883			21,169
Goodwill and intangible assets		22,291			22,458			22,514
Deferred tax asset		7,428			10,188			9,749
Taxes receivable		—			—			1,460
Other real estate owned		11,663			14,293			15,422
Prepaid FDIC assessment		3,164			4,387			4,950
Other assets		1,743			1,415			1,888

Total assets	$	1,251,571		$	1,210,176		$	1,192,004

LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Noninterest-bearing demand	$	279,733		$	234,331		$	220,104
Savings and interest-bearing checking		537,009			574,333			545,032
Time $100,000 and over		68,330			63,504			60,083
Other time		66,545			86,791			99,704

Total deposits		951,617			958,959			924,923
Federal funds and overnight funds purchased		8,185			—			12,380
Federal Home Loan Bank borrowings		98,500			67,000			68,500
Junior subordinated debentures		8,248			8,248			8,248
Accrued interest and other payables		3,951			3,731			5,374

Total liabilities		1,070,501			1,037,938			1,019,425

Shareholders’ equity
Common stock, shares authorized: 50,000,000 shares issued and outstanding: 18,433,084 at September 30, 2011, 18,415,132 at December 31, 2010, and 18,404,725 at September 30, 2010		137,660			137,062			136,845
Retained earnings		39,242			33,969			32,962
Accumulated other comprehensive income		4,168			1,207			2,772

		181,070			172,238			172,579

Total liabilities and shareholders’ equity	$	1,251,571		$	1,210,176		$	1,192,004

CAPITAL RATIOS
Total capital (to risk weighted assets)		18.89	%		17.10	%		17.10	%
Tier I capital (to risk weighted assets)		17.64	%		15.86	%		15.85	%
Tier I capital (to leverage assets)		13.48	%		13.38	%		13.34	%
Tangible common equity (to tangible assets)⁽¹⁾		12.92	%		12.61	%		12.83	%
Tangible common equity (to risk-weighted assets)⁽¹⁾		17.22	%		15.18	%		15.31	%
OTHER FINANCIAL DATA
Shares outstanding at end of period		18,433,084			18,415,132			18,404,725
Tangible shareholders’ equity⁽¹⁾	$	158,779		$	149,780		$	150,065
Book value per share	$	9.82		$	9.35		$	9.38
Tangible book value per share	$	8.61		$	8.13		$	8.15

⁽¹⁾	Tangible shareholders’ equity excludes goodwill and core deposit intangible assets related to acquisitions.

PACIFIC CONTINENTAL CORPORATION

Loans by Type and Allowance for Loan Losses

(In thousands)

(Unaudited)


	September 30, 2011			December 31, 2010			September 30, 2010
LOANS BY TYPE
Real estate secured loans:
Permanent loans:
Multifamily residential	$	54,029		$	57,850		$	56,124
Residential 1-4 family		62,726			76,692			80,551
Owner-occupied commercial		209,702			201,286			201,075
Nonowner-occupied commercial		149,548			163,071			163,054
Other loans secured by real estate		17,421			23,950			25,013

Total permanent real estate loans		493,426			522,849			525,817
Construction loans:
Multifamily residential		1,158			6,192			15,279
Residential 1-4 family		17,865			22,683			26,830
Commercial real estate		13,368			11,730			18,077
Commercial bare land and acquisition & development		24,987			25,587			26,073
Residential bare land and acquisition & development		13,034			17,263			18,998

Total construction real estate loans		70,412			83,455			105,257
Total real estate loans		563,838			606,304			631,074
Commercial loans		257,889			243,034			242,904
Consumer loans		5,021			5,900			6,742
Other loans		1,762			1,730			2,239

Gross loans		828,510			856,968			882,959
Deferred loan origination fees		(698	)		(583	)		(586	)

		827,812			856,385			882,373
Allowance for loan losses		(15,287	)		(16,570	)		(17,769	)

	$	812,525		$	839,815		$	864,604

Real estate loans held-for-sale	$	400		$	2,116		$	1,397


	Three months ended						Nine months ended
	September 30,			September 30,			September 30,			September 30,
	2011			2010			2011			2010
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$	15,326		$	17,854		$	16,570		$	13,367
Provision for loan losses		1,750			3,750			5,900			11,750
Loan charge offs		(2,208	)		(4,240	)		(8,085	)		(10,189	)
Loan recoveries		419			405			902			2,841

Net charge offs		(1,789	)		(3,835	)		(7,183	)		(7,348	)

Balance at end of period	$	15,287		$	17,769		$	15,287		$	17,769

PACIFIC CONTINENTAL CORPORATION

Selected Other Financial Information and Ratios

(In thousands)

(Unaudited)


	Three months ended						Nine months ended
	September 30, 2011			September 30, 2010			September 30, 2011			September 30, 2010
BALANCE SHEET AVERAGES
Loans⁽¹⁾	$	824,084		$	898,642		$	836,223		$	917,781
Allowance for loan losses		(15,193	)		(19,091	)		(15,889	)		(17,103	)

Loans, net of allowance		808,891			879,551			820,334			900,678
Securities and short-term deposits		323,996			201,861			292,171			187,180

Earning assets		1,132,887			1,081,412			1,112,505			1,087,858
Noninterest-earning assets		101,121			109,650			103,763			106,797

Assets	$	1,234,008		$	1,191,062		$	1,216,268		$	1,194,655

Interest-bearing core deposits⁽²⁾	$	612,576		$	627,263		$	622,038		$	600,870
Noninterest-bearing core deposits⁽²⁾		274,808			219,512			260,108			211,646

Core deposits⁽²⁾		887,384			846,775			882,146			812,516
Noncore interest-bearing deposits		71,940			68,016			62,517			79,926

Deposits		959,324			914,791			944,663			892,442
Borrowings		92,295			93,219			92,523			122,254
Other noninterest-bearing liabilities		3,493			10,961			3,281			9,823

Liabilities		1,055,112			1,018,971			1,040,467			1,024,519

Shareholders’ equity (book)		178,896			172,091			175,801			170,136

Liabilities and equity	$	1,234,008		$	1,191,062		$	1,216,268		$	1,194,655

Shareholders’ equity (tangible)⁽³⁾	$	156,575		$	149,547		$	153,425		$	147,537

SELECTED MARKET DATA
Eugene market gross loans, period end	$	262,469		$	267,098
Portland market gross loans, period end		394,469			409,702
Seattle market gross loans, period end		171,572			206,159

Total gross loans, period end	$	828,510		$	882,959

Eugene market core deposits, period end⁽²⁾	$	514,453		$	515,164
Portland market core deposits, period end⁽²⁾		242,341			221,407
Seattle market core deposits, period end⁽²⁾		123,933			114,323

Total core deposits, period end⁽²⁾		880,727			850,894
Other deposits, period end		70,890			74,029

Total	$	951,617		$	924,923

Eugene market core deposits, average⁽²⁾	$	507,644		$	510,593
Portland market core deposits, average⁽²⁾		252,903			216,818
Seattle market core deposits, average⁽²⁾		126,837			119,364

Total core deposits, average⁽²⁾		887,384			846,775
Other deposits, average		71,940			68,016

Total	$	959,324		$	914,791

NET INTEREST MARGIN RECONCILIATION
Yield on average loans		6.17	%		6.35	%		6.22	%		6.42	%
Yield on average securities⁽⁴⁾		3.13	%		3.61	%		3.24	%		3.46	%

Yield on average earning assets⁽⁴⁾		5.30	%		5.84	%		5.44	%		5.91	%
Rate on average interest-bearing core deposits		0.80	%		1.28	%		0.95	%		1.33	%
Rate on average interest-bearing non-core deposits		2.19	%		2.14	%		1.95	%		1.82	%

Rate on average interest-bearing deposits		0.94	%		1.37	%		1.04	%		1.40	%
Rate on average borrowings		2.17	%		3.03	%		2.23	%		2.43	%

Cost of interest-bearing funds		1.09	%		1.56	%		1.18	%		1.55	%

Interest rate spread⁽⁴⁾		4.21	%		4.28	%		4.25	%		4.36	%

Net interest margin⁽⁴⁾		4.56	%		4.70	%		4.61	%		4.77	%

⁽¹⁾	Includes loans held-for sale.

⁽²⁾	Core deposits include all demand, savings, and interest checking accounts plus all local time deposits including local time deposits in excess of $100.

⁽³⁾	Tangible equity excludes goodwill and core deposit intangible assets related to acquisitions.

⁽⁴⁾

Tax-exempt income has been adjusted to a tax-equivalent basis at a 35% tax rate. The amount of such adjustment was an addition to recorded income of approximately $143 thousand and $43 thousand for the three months ended September 30, 2011 and 2010, respectively and $366 thousand and $94 thousand for the nine months ended September 30. 2011 and 2010, respectively.

PACIFIC CONTINENTAL CORPORATION

Nonperforming Assets and Asset Quality Ratios

(In thousands)

(Unaudited)


	September 30, 2011			December 31, 2010			September 30, 2010
NONPERFORMING ASSETS
Non-accrual loans
Real estate secured loans:
Permanent loans:
Multifamily residential	$	—		$	1,010		$	6,594
Residential 1-4 family		3,393			6,123			4,945
Owner-occupied commercial		4,704			1,622			4,306
Nonowner-occupied commercial		1,191			8,428			7,359
Other loans secured by real estate		122			538			1,379

Total permanent real estate loans		9,410			17,721			24,583
Construction loans:
Multifamily residential		—			1,985			2,033
Residential 1-4 family		1,596			2,493			3,099
Commercial real estate		1,500			1,671			4,262
Commercial bare land and acquisition & development		13,027			91			669
Residential bare land and acquisition & development		1,451			1,032			90
Other		—			—			—

Total construction real estate loans		17,574			7,272			10,153

Total real estate loans		26,984			24,993			34,736
Commercial loans		6,732			8,033			8,602
Consumer loans		—			—			—
Other loans		—			—			—

Total nonaccrual loans		33,716			33,026			43,338
90-days past due and accruing interest		—			—			—
Total nonperforming loans		33,716			33,026			43,338

Nonperforming loans guaranteed by government		(851	)		(1,056	)		(798	)
Net nonperforming loans		32,865			31,970			42,540

Other real estate owned		11,663			14,293			15,422

Total nonperforming assets, net of guaranteed loans	$	44,528		$	46,263		$	57,962

ASSET QUALITY RATIOS
Allowance for loan losses as a percentage of total loans outstanding		1.85	%		1.93	%		2.01	%
Allowance for loan losses as a percentage of total nonperforming loans, net of government guarantees		46.51	%		51.83	%		41.77	%
Net loan charge offs (recoveries) as a percentage of average loans, annualized		1.15	%		1.30	%		1.07	%
Net nonperforming loans as a percentage of total loans		3.97	%		3.73	%		4.82	%
Nonperforming assets as a percentage of total assets		3.56	%		3.82	%		4.86	%
Consolidated classified asset ratio⁽¹⁾		45.51	%		63.39	%		72.91	%
Past due (excluding nonaccrual) as a percentage of total loans		0.59	%		0.77	%		0.88	%

⁽¹⁾

Classified asset ratio is defined as the sum of all loan-related contingent liabilities and loans internally graded substandard or worse, impaired loans (net of government guarantees), adversely classified securities, and other real estate owned, divided by total consolidated Tier 1 capital plus the allowance for loan losses.

PACIFIC CONTINENTAL CORPORATION

Nonperforming Loan Rollforward

(In thousands)

(Unaudited)


	Balance at June 30, 2011		Additions to Non-performing		Reclassification			Net Paydowns			Returns to Performing			Charge-offs			Transfers to OREO			Balance at September 30, 2011
Real estate loans
Multifamily residential	$	—			$	—		$	—		$	—		$	—		$	—		$	—
Residential 1-4 family		8,177		734		—			(2,187	)		—			(651	)		(2,680	)		3,393
Owner-occupied commercial		3,575		1,157		—			(28	)		—			—			—			4,704
Nonowner-occupied commercial		7,827		—		—			(1,134	)		—			(802	)		(4,700	)		1,191
Other real estate loans		922		108		—			(829	)		—			(79	)		—			122

Total real estate loans		20,501		1,999		—			(4,178	)		—			(1,532	)		(7,380	)		9,410
Construction
Multifamily residential		—		—		—			—			—			—			—			—
Residential 1-4 family		1,699		383		—			(326	)		—			(29	)		(131	)		1,596
Commercial real estate		1,500		—		—			—			—			—			—			1,500
Commercial bare land and acquisition & development		13,027		—		—			—			—			—			—			13,027
Residential bare land and acquisition & development		1,597		70		—			(107	)		—			(109	)		—			1,451

Total construction loans		17,823		453		—			(433	)		—			(138	)		(131	)		17,574
Commercial and other		6,515		825		—			(608	)		—			—			—			6,732
Consumer		—		—		—			—			—			—			—			—

Total	$	44,839	$	3,277	$	—		$	(5,219	)	$	—		$	(1,670	)	$	(7,511	)	$	33,716


	Balance at December 31, 2010		Additions to Non-performing		Reclassification			Net Paydowns			Returns to Performing			Charge-offs			Transfers to OREO			Balance at September 30, 2011

Real estate loans
Multifamily residential	$	1,010	$	250	$	—		$	(1,186	)	$	—		$	(74	)	$	—		$	—
Residential 1-4 family		6,123		4,719		—			(2,637	)		—			(1,607	)		(3,205	)		3,393
Owner-occupied commercial		1,622		3,822		—			(415	)		—			(25	)		(300	)		4,704
Nonowner-occupied commercial		8,428		—		—			(1,272	)		—			(1,265	)		(4,700	)		1,191
Other real estate loans		538		1,340		(499	)		(868	)		—			(389	)		—			122

Total real estate loans		17,721		10,131		(499	)		(6,378	)		—			(3,360	)		(8,205	)		9,410
Construction
Multifamily residential		1,985		—		—			(1,985	)		—			—			—			—
Residential 1-4 family		2,493		797		—			(1,050	)		—			(450	)		(194	)		1,596
Commercial real estate		1,671		—		—			—			—			(171	)		—			1,500
Commercial bare land and acquisition & development		91		13,027		—			—			—			(91	)		—			13,027
Residential bare land and acquisition & development		1,032		2,320		—			(251	)		—			(1,614	)		(36	)		1,451

Total construction loans		7,272		16,144		—			(3,286	)		—			(2,326	)		(230	)		17,574
Commercial and other		8,033		1,425		499			(2,098	)		(461	)		(666	)		—			6,732
Consumer		—		10		—			—			—			(10	)		—			—

Total	$	33,026	$	27,710	$	—		$	(11,762	)	$	(461	)	$	(6,362	)	$	(8,435	)	$	33,716

PACIFIC CONTINENTAL CORPORATION

Other Real Estate Owned Rollforward

(In thousands)

(Unaudited)


	Balance at June 30, 2011		Additions to REO		Capitalized Costs		Paydowns/ Sales			Writedowns/ Loss/Gain			Balance at September 30, 2011
Real estate
Multifamily residential	$	—	$	—	$	—	$	—		$	—			—
Residential 1-4 family		1,201		2,680		—		(432	)		(17	)		3,432
Owner-occupied commercial		300		—		—		—			—			300
Nonowner-occupied commercial		—		4,700		—		(175	)		—			4,525
Other real estate loans		—		—		—		—			—			—

Total real estate loans		1,501		7,380		—		(607	)		(17	)		8,257
Construction
Multifamily residential		—		—		—		—			—			—
Residential 1-4 family		63		131		—		—			—			194
Commercial real estate		3,818		—		—		(1,123	)		(632	)		2,063
Commercial bare land and acquisition & development		828		—		—		—			(9	)		819
Residential bare land and acquisition & development		6,102		—		—		(5,794	)		22			330

Total construction loans		10,811		131		—		(6,917	)		(619	)		3,406
Commercial and other		—		—		—		—			—			—
Consumer		—		—		—		—			—			—

Total	$	12,312	$	7,511	$	—	$	(7,524	)	$	(636	)	$	11,663


	Balance at December 31, 2010		Additions to REO		Capitalized Costs		Paydowns/ Sales			Writedowns/ Loss/Gain			Balance at September 30, 2011
Real estate
Multifamily residential	$	—	$	—	$	—	$	—		$	—			—
Residential 1-4 family		1,374		3,205		—		(1,094	)		(53	)		3,432
Owner-occupied commercial		—		300		—		—			—			300
Nonowner-occupied commercial		—		4,700		—		(175	)		—			4,525
Other real estate loans		—		—		—		—			—			—

Total real estate loans		1,374		8,205		—		(1,269	)		(53	)		8,257
Construction
Multifamily residential		—		—		—		—			—			—
Residential 1-4 family		1,178		194		—		(953	)		(225	)		194
Commercial real estate		4,389		—		—		(1,123	)		(1,203	)		2,063
Commercial bare land and acquisition & development		1,013		—		—		—			(194	)		819
Residential bare land and acquisition & development		6,301		36		—		(5,794	)		(213	)		330

Total construction loans		12,881		230		—		(7,870	)		(1,835	)		3,406
Commercial and other		38		—		—		(44	)		6			—
Consumer		—		—		—		—			—			—

Total	$	14,293	$	8,435	$	—	$	(9,183	)	$	(1,882	)	$	11,663

PACIFIC CONTINENTAL CORPORATION

Age Analysis of Loans Receivable (Unaudited)

(In thousands)

As of September 30, 2011


	30-59 Days Past Due Still Accruing		60-89 Days Past Due Still Accruing		Greater Than 90 Days Still Accruing		Nonaccrual		Total Past Due and Nonaccrual		Total Current		Total Loans Receivable
Real estate loans
Multifamily residential	$	—	$	—	$	—	$	—	$	—	$	54,029	$	54,029
Residential 1-4 family		—		900		—		3,393		4,293		58,433		62,726
Owner-occupied commercial		2,502		934		—		4,704		8,140		201,562		209,702
Nonowner-occupied commercial		—		—		—		1,191		1,191		148,357		149,548
Other real estate loans		—		—		—		122		122		17,299		17,421

Total real estate loans		2,502		1,834		—		9,410		13,746		479,679		493,426
Construction
Multifamily residential		—		—		—		—		—		1,158		1,158
Residential 1-4 family		—		—		—		1,596		1,596		16,269		17,865
Commercial real estate		—		—		—		1,500		1,500		11,868		13,368
Commercial bare land and acquisition & development		—		—		—		13,027		13,027		11,960		24,987
Residential bare land and acquisition & development		—		—		—		1,451		1,451		11,583		13,034

Total construction loans		—		—		—		17,574		17,574		52,838		70,412
Commercial and other		532		—		—		6,732		7,264		252,387		259,651
Consumer		16		—		—		—		16		5,005		5,021

Totals	$	3,050	$	1,834	$	—	$	33,716	$	38,600	$	789,909	$	828,510

PACIFIC CONTINENTAL CORPORATION

Age Analysis of Loans Receivable (Unaudited)

(In thousands)

As of December 31, 2010


	30-59 Days Past Due Still Accruing		60-89 Days Past Due Still Accruing		Greater Than 90 Days Still Accruing		Nonaccrual		Total Past Due and Nonaccrual		Total Current		Total Financing Receivables
Real estate loans
Multifamily residential	$	2,549	$	—	$	—	$	1,010	$	3,559	$	54,291	$	57,850
Residential 1-4 family		110		366		—		6,123		6,599		70,093		76,692
Owner-occupied commercial		2,694		356		—		1,622		4,672		196,614		201,286
Nonowner-occupied commercial		—		—		—		8,428		8,428		154,643		163,071
Other real estate loans		195		—		—		538		733		23,217		23,950

Total real estate loans		5,548		722		—		17,721		23,991		498,858		522,849
Construction
Multifamily residential		—		—		—		1,985		1,985		4,207		6,192
Residential 1-4 family		—		—		—		2,493		2,493		20,190		22,683
Commercial real estate		—		—		—		1,671		1,671		10,059		11,730
Commercial bare land and acquisition & development		—		—		—		91		91		25,496		25,587
Residential bare land and acquisition & development		175		—		—		1,032		1,207		16,056		17,263

Total construction loans		175		—		—		7,272		7,447		76,008		83,455
Commercial and other		102		32		—		8,033		8,167		236,597		244,764
Consumer		7		5		—		—		12		5,888		5,900

Total	$	5,832	$	759	$	—	$	33,026	$	39,617	$	817,351	$	856,968

PACIFIC CONTINENTAL CORPORATION

Credit Quality Indicators (Unaudited)

(In thousands)

As of September 30, 2011


	Loan Grade
	Pass		Special Mention		Substandard		Doubtful		Totals
Real estate loans
Multifamily residential		52,670		—		1,359		—	$	54,029
Residential 1-4 family		52,064		—		10,662		—		62,726
Owner-occupied commercial		197,328		—		12,374		—		209,702
Nonowner-occupied commercial		146,735		—		2,813		—		149,548
Other real estate loans		16,442		—		871		108		17,421

Total real estate loans		465,239		—		28,079		108		493,426
Construction
Multifamily residential		1,158		—		—		—		1,158
Residential 1-4 family		12,647		—		5,218		—		17,865
Commercial real estate		8,962		—		4,406		—		13,368
Commercial bare land and acquisition & development		11,300		—		13,687		—		24,987
Residential bare land and acquisition & development		9,746		—		2,249		1,039		13,034

Total construction loans		43,813		—		25,560		1,039		70,412
Commercial and other		248,835		—		9,991		825		259,651
Consumer		4,935		—		86		—		5,021

Totals	$	762,822	$	—	$	63,716	$	1,972	$	828,510

PACIFIC CONTINENTAL CORPORATION

Credit Quality Indicators (Unaudited)

(In thousands)

As of December 31, 2010


	Loan Grade
	Pass		Special Mention		Substandard		Doubtful		Totals
Real estate loans
Multifamily residential	$	55,105	$	—	$	2,745	$	—	$	57,850
Residential 1-4 family		60,544		—		15,658		490		76,692
Owner-occupied commercial		185,362		—		14,274		1,650		201,286
Nonowner-occupied commercial		153,088		—		9,983		—		163,071
Other real estate loans		20,343		—		3,607		—		23,950

Total real estate loans		474,442		—		46,267		2,140		522,849
Construction
Multifamily residential		4,206		—		1,986		—		6,192
Residential 1-4 family		19,532		—		3,151		—		22,683
Commercial real estate		7,114		—		4,616		—		11,730
Commercial bare land and acquisition & development		11,771		—		13,816		—		25,587
Residential bare land and acquisition & development		11,886		—		5,377		—		17,263

Total construction loans		54,509		—		28,946		—		83,455
Commercial and other		231,358		—		13,406		—		244,764
Consumer		5,860		—		—		40		5,900

Totals	$	766,169	$	—	$	88,619	$	2,180	$	856,968

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