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8-K - FORM 8-K - CIM Commercial Trust Corpd394206d8k.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 MKT (Symbol PCC)

www.pmctrust.com

 

Dallas, TX    August 8, 2012

PMC Commercial Trust (NYSE MKT: PCC) announced second quarter and year-to-date financial results today.

Compared to Second Quarter 2011

We recorded a loss from continuing operations for the second quarter of 2012 of $93,000 (($0.01) per share) compared to income from continuing operations of $1,235,000 ($0.12 per share) during the second quarter of 2011. Net income (loss) decreased to a loss of $415,000 (($0.04) per share), during the second quarter of 2012 compared to income of $1,339,000, or $0.13 per share, for the second quarter of 2011. The primary reason for the decrease in income (loss) from continuing operations and net income (loss) were costs of $1,352,000 related to the evaluation of strategic alternatives. Income from continuing operations and net income were $1,259,000 and $937,000, respectively, during the second quarter of 2012 before the impact of these strategic alternative costs.

The reduction in net income was also due to recognition of previously deferred gains of $683,000 during the second quarter of 2011 included in discontinued operations. Primarily as a result of these gains, we had $104,000 in income from discontinued operations during the second quarter of 2011 compared to a loss of $322,000 during the second quarter of 2012.

Our 2012 year-to-date income (loss) from continuing operations decreased to a loss of $99,000 (($0.01) per share) from income of $2,359,000 ($0.22 per share) during the six months ended June 30, 2011. Our 2012 year-to-date net income (loss) decreased to a loss of $570,000 (($0.05) per share) from net income of $2,255,000 ($0.21 per share) during the six months ended June 30, 2011. The primary reasons for the reductions in net income were the costs related to the evaluation of strategic alternatives of $2,202,000 and the deferred gain recognition of $685,000 during the six months ended June 30, 2011.

Management Remarks

Jan F. Salit, Chief Operating Officer, stated, “Our core operations continue to remain strong despite the continued low interest rate environment and the uncertain economy. Our comparative net income before strategic alternative expenses and the impact of the 2011 deferred gain recognition (included in discontinued operations) increased from net income of $1,570,000 during the first half of 2011 to net income of $1,632,000 during the first half of 2012. While the special committee of our Board of Trust Managers continues its review of strategic alternatives we continue to execute our current business strategy of increasing loan origination volume primarily through our SBA regulated subsidiaries.


PMC COMMERCIAL TRUST    Earnings Press Release    August 8, 2012

 

“We have achieved positive results from our marketing initiatives and increased our loans funded by a significant amount to $26.6 million in fundings during the first half of 2012 compared to $14.0 million during the same period in 2011. We are anticipating loan fundings in 2012 to be greater than $50 million compared to $38.4 million in 2011.”

“Another important aspect of our business is selling the government guaranteed portion of our loans originated under the SBA’s flagship “7(a)” loan program. Since we sometimes maintain servicing spreads greater than the minimum required amount, cash premiums we receive from those legal loan sales are deferred for accounting purposes. At June 30, 2012 we had a total of $3.1 million of remaining deferred cash premiums included in liabilities compared to $2.4 million at December 31, 2011. For tax purposes, all legal sales are treated as sales and we generated book tax timing differences of additional tax affected gain recognition of approximately $600,000 and $500,000 during the first half of 2012 and first half of 2011, respectively.”

Interest Rate Sensitivity

 

   

Approximately 52% and 29% of our retained loans at June 30, 2012 were based on LIBOR and the prime rate, respectively.

 

   

Variable rates have remained stable.

Financial Position

 

   

Our total assets increased to $254.9 million at June 30, 2012 compared to $251.2 million at December 31, 2011 and $252.8 million at June 30, 2011.

 

   

Our retained loan portfolio increased to $245.1 million at June 30, 2012 compared to $236.1 million at December 31, 2011 and $234.1 million as of June 30, 2011.

 

   

Our serviced loan portfolio increased to $306.3 million at June 30, 2012 compared to $297.5 million at December 31, 2011 and $287.5 at June 30, 2011.

 

   

Loan loss reserves decreased from $1.8 million at December 31, 2011 to $1.6 million at June 30, 2012. The decrease is due primarily to the write-off of a limited service hospitality loan on which the collateral was foreclosed during May 2012.

Portfolio Information

 

   

During the six months ended June 30, 2012, our aggregate loans funded were $26.6 million compared to $14.0 million during the six months ended June 30, 2011, an increase of 90%.

 

   

During the six months ended June 30, 2012, we funded $18.1 million of SBA 7(a) loans compared to $12.9 million during the six months ended June 30, 2011.

 

   

Our pipeline of outstanding loan commitments was $22.3 million at June 30, 2012 compared to $14.3 million at December 31, 2011.

 

   

We anticipate our 2012 fundings to be between $50 million and $60 million.

Liquidity

 

   

Our unsecured revolving credit facility matures June 30, 2014. The interest rate is prime less 50 basis points or the 30-day LIBOR plus 2%, at our option. The total amount available under the facility is $35 million. The revolving credit facility will automatically increase to $40 million on January 1, 2013 provided there is no event of default on that date and the non-performing loan ratio, as defined, is not more than 20% on that date. During June 2012, we amended our revolving credit facility to reduce the minimum beneficiaries’ equity covenant from $142.0 million to $139.5 million from June 15 to June 30, 2012; $137.0 million from July 1 to September 30, 2012; $134.5 million from October 1 to December 31, 2012 and $132.0 million from January 1, 2013 and thereafter.

 

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PMC COMMERCIAL TRUST    Earnings Press Release    August 8, 2012

 

Dividends

 

   

Regular quarterly dividends on our common shares of $0.16 per share were declared in March and paid in April. Regular quarterly dividends on our common shares of $0.16 per share were declared in June and paid in July.

 

   

Since our inception in 1993, we have paid $181.2 million in dividends or $24.12 per common share.

Financial Position Information

 

     June 30,
2012
     March 31,
2012
     Dec. 31,
2011
     Sept. 30,
2011
     June 30,
2011
 
     (In thousands, except per share information)  

Loans receivable, net

   $ 243,759       $ 235,744       $ 234,427       $ 235,426       $ 232,292   

Total assets

   $ 254,853       $ 247,298       $ 251,247       $ 260,826       $ 252,801   

Debt

   $ 101,470       $ 93,799       $ 95,861       $ 104,028       $ 95,510   

Total beneficiaries’ equity

   $ 142,879       $ 144,982       $ 146,836       $ 147,830       $ 148,752   

Total equity

   $ 143,779       $ 145,882       $ 147,736       $ 148,730       $ 149,652   

Shares outstanding

     10,590         10,585         10,575         10,575         10,575   

Net asset value per share

   $ 13.58       $ 13.78       $ 13.97       $ 14.06       $ 14.15   

 

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PMC COMMERCIAL TRUST    Earnings Press Release    August 8, 2012

 

PMC Commercial Trust and Subsidiaries

Comparative Results of Operations

 

     Six Months Ended June 30,  
     2012     2011     Inc (Dec) %  
     (Dollars in thousands, except per share information)  

Income:

      

Interest income

   $ 6,831      $ 6,756        1

Premium income

     391        559        (30 %) 

Other income

     529        588        (10 %) 
  

 

 

   

 

 

   

 

 

 

Total revenues

     7,751        7,903        (2 %) 
  

 

 

   

 

 

   

 

 

 

Expenses:

      

Interest

     1,759        1,930        (9 %) 

Salaries and related benefits

     2,259        2,216        2

General and administrative

     998        1,048        (5 %) 

Strategic alternatives

     2,202        —          NM   

Provision for loan losses, net

     593        379        56
  

 

 

   

 

 

   

 

 

 

Total expenses

     7,811        5,573        40
  

 

 

   

 

 

   

 

 

 

Income (loss) before income tax benefit (provision) and discontinued operations

     (60     2,330        (103 %) 

Income tax benefit (provision)

     (39     29        (234 %) 
  

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     (99     2,359        (104 %) 

Discontinued operations

     (471     (104     353
  

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (570   $ 2,255        (125 %) 
  

 

 

   

 

 

   

 

 

 

Basic weighted average shares outstanding

     10,581        10,566     
  

 

 

   

 

 

   

Basic and diluted earnings (loss) per share:

      

Income (loss) from continuing operations

   $ (0.01   $ 0.22     

Discontinued operations

     (0.04     (0.01  
  

 

 

   

 

 

   

Net income (loss)

   $ (0.05   $ 0.21     
  

 

 

   

 

 

   

 

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PMC COMMERCIAL TRUST    Earnings Press Release    August 8, 2012

 

Quarterly Operating Results

 

     Three Months Ended  
     June 30,
2012
    March 31,
2012
    Dec 31,
2011
    Sept. 30,
2011
    June 30,
2011
 
     (In thousands)  

Revenues:

          

Interest income

   $ 3,433      $ 3,398      $ 3,473      $ 3,342      $ 3,389   

Premium income

     278        113        649        242        128   

Other income

     253        276        242        225        330   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     3,964        3,787        4,364        3,809        3,847   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Expenses:

          

Interest

     876        883        822        941        957   

Salaries and related benefits

     1,115        1,144        1,066        1,047        1,099   

General and administrative

     538        460        408        554        544   

Strategic alternatives

     1,352        850        717        61        —     

Provision for (reduction of) loan losses

     118        475        98        (17     66   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     3,999        3,812        3,111        2,586        2,666   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax benefit (provision) and discontinued operations

     (35     (25     1,253        1,223        1,181   

Income tax benefit (provision)

     (58     19        (152     9        54   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     (93     (6     1,101        1,232        1,235   

Discontinued operations

     (322     (149     (442     (499     104   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (415   $ (155   $ 659      $ 733      $ 1,339   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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PMC COMMERCIAL TRUST    Earnings Press Release    August 8, 2012

 

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 (loss) to REIT taxable income:

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2012     2011     2012     2011  
     (In thousands)  

Net income (loss)

   $ (415   $ 1,339      $ (570   $ 2,255   

Gains related to real estate

     —          (683     —          (235

Strategic alternatives

     1,352        —          2,202        —     

Impairment losses

     167        209        167        209   

Amortization and accretion

     (12     (17     (169     (33

Loan valuation

     (494     (41     (89     147   

Other, net

     78        4        160        34   
  

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

     676        811        1,701        2,377   

Less: taxable REIT subsidiaries net loss (income), net of tax

     (89     128        (30     100   
  

 

 

   

 

 

   

 

 

   

 

 

 

REIT taxable income

   $ 587      $ 939      $ 1,671      $ 2,477   
  

 

 

   

 

 

   

 

 

   

 

 

 

Distributions declared

   $ 1,694      $ 1,692      $ 3,388      $ 3,383   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding

     10,586        10,570        10,581        10,566   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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PMC COMMERCIAL TRUST    Earnings Press Release    August 8, 2012

 

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 TRS’s taxable income (net of income tax expense) is materially different than our net income (loss). The following table reconciles our net income (loss) to our Adjusted Taxable Income (Loss), Net of Current Tax Expense:

 

     Six Months Ended June 30, 2012  
     Combined     REIT     TRS’s  
     (In thousands, except footnotes)  

Net income (loss)

   $ (570   $ (600   $ 30   

Book vs. tax timing differences

     2,704        2,271        433 (1) 
  

 

 

   

 

 

   

 

 

 

Taxable income

     2,134        1,671        463   

Special item (2)

     (2,202     (2,202     —     
  

 

 

   

 

 

   

 

 

 

Taxable Income (Loss), adjusted for special item

     (68     (531     463   

Current income tax expense

     (158     —          (158
  

 

 

   

 

 

   

 

 

 

Adjusted Taxable Income (Loss), Net of Current Tax Expense

   $ (226   $ (531   $ 305   
  

 

 

   

 

 

   

 

 

 
     Six Months Ended June 30, 2011  
     Combined     REIT     TRS’s  
     (In thousands, except footnotes)  

Net income

   $ 2,255      $ 2,355      $ (100

Book vs. tax timing differences

     815        122        693 (1) 
  

 

 

   

 

 

   

 

 

 

Taxable income

     3,070        2,477        593   

Special item (3)

     (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   
  

 

 

   

 

 

   

 

 

 

 

(1) Includes $775,000 and $690,000 of timing differences during the six months ended June 30, 2012 and 2011, respectively, related primarily to secondary market loan sales.
(2) Timing difference related to currently non-deductible expenses related to strategic alternatives.
(3) Recognition of deferred gain for tax purposes on the property previously owned by our off-balance sheet variable interest entity.

Adjusted Taxable Income (Loss), Net of Current Tax Expense is defined as reported net income (loss), 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 (Loss), 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 Company’s 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 Company’s 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 Company’s ability to access capital under its credit facility or otherwise, many of which are beyond the Company’s control and which are described in the Company’s 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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