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Exhibit 99.1

NEWS RELEASE

 

FOR MORE INFORMATION CONTACT:

   Michael Dunne
     Public Information Officer
     541-338-1428
      
     www.therightbank.com
     Email: michael.dunne@therightbank.com

FOR IMMEDIATE RELEASE

Pacific Continental Corporation Reports First Quarter Results

Quality Loan and Deposit Growth Drive Solid Earnings and Strong First Quarter Results

EUGENE, Ore., April 20, 2016 – Pacific Continental Corporation (Nasdaq: PCBK), the holding company of Pacific Continental Bank, today reported financial results for the first quarter ended March 31, 2016.

First Quarter highlights:

    Net income of $5.5 million, or $0.28 per diluted share.
    Return on average assets of 1.12%.
    Return on average tangible equity of 12.35%.
    Tax-equivalent net interest margin of 4.27%.
    Efficiency ratio of 57.52%.
    Declared second quarter 2016 regular quarterly cash dividend of $0.11 per share.
    Recognized by S&P Global Market Intelligence as the 19th ranked top-performing bank for 2015 for all banks with assets between $1 billion and $10 billion.
    Recognized by Raymond James for the second consecutive year as a “Bankers Cup” award winner, representing the top 10 percent of community banks nationally.

Net Income Highlights

Net income for first quarter 2016 was $5.5 million or $0.28 per diluted share compared to net income of $5.5 million or $0.28 per diluted share in the fourth quarter 2015. Annualized returns on average assets, average equity and average tangible equity for first quarter 2016 were 1.12%, 9.92%, and 12.35%, respectively, compared to 1.16%, 10.10%, and 12.60% for fourth quarter 2015. In addition, the Company’s efficiency ratio was 57.52% for first quarter 2016 compared to 55.50% for the fourth quarter 2015.

“We are very pleased with first quarter results, as we remain focused on our niche community bank strategy and quality growth to achieve superior performance,” said Roger Busse, chief executive officer. “Our dedicated team of community bankers continues to set the bar high in their execution of industry-leading client service and relationship banking.”

First quarter 2016 noninterest income was $1.8 million, down $201 thousand from fourth quarter 2015. The decrease in linked-quarter noninterest income was primarily due to gains on sales of securities, which were $100 thousand lower than the fourth quarter 2015. Additionally, bankcard income was down by $52 thousand from the fourth quarter, primarily due to one-time annual fees that are charged each December.

Noninterest expense in first quarter 2016 was $12.0 million, an increase of $301 thousand from fourth quarter 2015. The increase primarily related to the salaries and benefits category, which increased by $281 thousand over the period quarter. The increase was due to above average claim activity experienced during the quarter, which required $300 thousand in additional reserves as the Bank’s insurance coverage is partially self-funded. Payroll taxes during first quarter were also $152 thousand higher than fourth quarter 2015, which is typical as the FICA limits reset at the beginning of each year. Other than legal and professional fees, all other categories remained relatively flat quarter over quarter. Legal and professional fee expense was up by $73 thousand, over fourth quarter 2015, primarily due to year-end related audits and reporting.


Net Interest Margin

The first quarter 2016 net interest margin averaged 4.27%, a decrease of eight basis points over fourth quarter 2015 net interest margin of 4.35%. The primary cause of the decrease in the linked-quarter net interest margin was the fluctuation in accretion of acquired loan fair value discounts. Accretion income for the first quarter 2016 was $409 thousand compared to $671 thousand for the fourth quarter 2015. Additionally, three brokered time deposits totaling $5.5 million were called which created $61 thousand in expense related to the accelerated amortization of the origination fees related to the time deposits. These brokered time deposits were replaced with lower cost brokered time deposits. The interest savings on the replacements should recoup the accelerated fee expenses during 2016 and save the Bank approximately $288 thousand over the five-year term. The accelerated brokered time deposit fees decreased net interest margin by 0.01%. As outlined below, the core margin was 4.17% for the first quarter 2016 compared to 4.19% for the fourth quarter 2015.

 

     First Quarter 2016     Fourth Quarter 2015  
     Average
Balance
     Income
(Expense)
    Yield     Average
Balance
     Income
(Expense)
    Yield  

Federal funds sold and interest-bearing deposits

   $ 34,380       $ 45        0.53   $ 15,893       $ 11        0.27

Federal Home Loan Bank stock

     4,058         28        2.78     5,018         32        2.53

Securities available-for-sale (1)

     379,001         2,422        2.57     380,959         2,421        2.52

Net loans (2)

     1,403,115         17,480        5.01     1,357,461         17,186        5.02
  

 

 

    

 

 

     

 

 

    

 

 

   

Earning assets

     1,820,554         19,975        4.41     1,759,331         19,650        4.43

Interest bearing liabilities

     1,110,173         (1,083     -0.39     1,084,218         (1,056     -0.39

Core margin (non-GAAP)

     1,820,554         18,892        4.17     1,759,331         18,594        4.19

Acquired loan accretion

        409        0.09        671        0.15

Prepayment penalties on loans

        84        0.02        16        0.00

Prepayment penalties on brokered deposits

        (61     -0.01        —          0.00
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Net interest margin

   $ 1,820,554       $ 19,324        4.27   $ 1,759,331       $ 19,281        4.35
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

 

(1)  Tax-exempt security 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 $257 and $261 for the three months ended March 31, 2016 and December 31, 2015, respectively. Net interest margin was positively impacted by 6 and 6 basis points, respectively.
(2) Tax-exempt loan 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 $258 and $199 for the three months ended March 31, 2016 and December 31, 2015, respectively. Net interest margin was positively impacted by 6 and 4 basis points, respectively.

Balance Sheet Highlights

Loans, net of deferred fees, grew by $25.3 million in first quarter 2016, and totaled $1.43 billion at March 31, 2016. First quarter loan growth came primarily from the owner and non-owner occupied commercial real estate, and commercial loan categories. Net loan growth occurred in the Portland, Seattle and National Health-care markets, with a slight contraction in the Eugene market due to normal amortizations outpacing new loan production. At March 31, 2016, loans to dental practitioners increased to $350.9 million and represented 24.52% of the loan portfolio.

Period-end Company-defined core deposits at March 31, 2016, were $1.63 billion. Core deposits were up $100.0 million during the first quarter 2016, representing an annualized increase of 26.22%. At March 31, 2016, noninterest-bearing demand deposits totaled $675.3 million and represented 41.33% of core deposits. Cost of funds on core deposits was 0.26% for the first quarter 2016, unchanged from fourth quarter 2015.

“Our solid loan growth, coupled with outstanding core deposit growth highlighted the Bank’s continued quarterly performance,” said Casey Hogan, chief operating officer. “Our markets continued to grow through new business

opportunities, along with the expansion of existing client relationships. We were extremely pleased with our level of deposit growth, especially given that we typically experience flat growth or even some contraction during the first quarter.”

Asset Quality

During the first quarter, the Company made a $245 thousand provision for loan losses compared to $520 thousand in the fourth quarter 2015. First quarter 2016 provision for loan losses was primarily related to the loan growth experienced during the quarter, as credit quality remained strong. As of March 31, 2016, the allowance for loan losses as a percentage of outstanding loans was 1.23%, unchanged from December 31, 2015. At March 31, 2016, the allowance for loan losses as a percentage of nonperforming loans, net of government guarantees, remained strong at 666.01% compared to 636.30% at December 31, 2015. During the first quarter 2016, the Company recorded net loan recoveries of $50 thousand.

 


At March 31, 2016, nonperforming assets, net of government guarantees, totaled $14.4 million, or 0.73% of total assets, compared to $14.5 million, or 0.76% of total assets at December 31, 2015. Nonperforming assets at March 31, 2016, were comprised of $2.7 million of nonperforming loans, net of government guarantees of $2.7 million, and $11.7 million in other real estate owned. Loans past-due 30-89 days were 0.07% of total loans at March 31, 2016, compared to 0.03% of total loans at December 31, 2015.

Capital Adequacy

The Company’s consolidated capital ratios continued to be above the minimum thresholds for the FDIC’s “well-capitalized” designation. At March 31, 2016, the Company’s capital ratios were as follows:

 

     March 31, 2016  

Minimum dollar requirements

   Pacific
Continental
Corporation
    Regulatory
Minimum (Well-
Capitalized)
    Excess  

Tier I capital (to leverage assets)

   $ 186,196      $ 95,475      $ 90,721   

Common equity tier 1 capital (to risk weighted assets)

   $ 178,196      $ 106,490      $ 71,706   

Tier I capital (to risk weighted assets)

   $ 186,196      $ 131,064      $ 55,132   

Total capital (to risk weighted assets)

   $ 204,152      $ 163,831      $ 40,321   

Minimum percentage requirements

   Pacific
Continental
Corporation
    Regulatory
Minimum (Well-
Capitalized)
       

Tier I capital (to leverage assets)

     9.75     5.00  

Common equity tier 1 capital (to risk weighted assets)

     10.88     6.50  

Tier I capital (to risk weighted assets)

     11.37     8.00  

Total capital (to risk weighted assets)

     12.46     10.00  

Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principles (GAAP), this press release contains certain non-GAAP financial measures. The Company believes that such non-GAAP financial measures provide investors with information useful in understanding the Company’s financial performance; however, readers of this release are urged to review these non-GAAP financial measures in conjunction with the GAAP results as reported.

Financial measures such as tangible shareholders’ equity, and tangible assets, are considered non-GAAP measures. Management believes including non-GAAP measures along with GAAP measures provides investors with a broader understanding of capital adequacy, funding sources and revenue trends. Tangible shareholders’ equity is calculated as total shareholders’ equity less goodwill and core deposit intangible assets. Additionally, tangible assets are calculated as total assets less goodwill and core deposit intangible assets.


The following table presents a reconciliation of ending total shareholders’ equity (GAAP) to ending tangible shareholders’ equity (non-GAAP), and total assets (GAAP) to total tangible assets (non-GAAP):

 

     March 31,      December 31,      March 31,  
     2016      2015      2015  
     (In thousands)  

Total shareholders’ equity

   $ 224,879       $ 218,491       $ 210,651   

Subtract:

        

Goodwill

     40,027         39,255         39,032   

Core deposit intangible assets

     3,781         3,904         4,274   
  

 

 

    

 

 

    

 

 

 

Tangible shareholders’ equity (non-GAAP)

   $ 181,071       $ 175,332       $ 167,345   
  

 

 

    

 

 

    

 

 

 

Total assets

   $ 1,965,705       $ 1,909,478       $ 1,780,849   

Subtract:

        

Goodwill

     40,027         39,255         39,032   

Core deposit intangible assets

     3,781         3,904         4,274   
  

 

 

    

 

 

    

 

 

 

Total tangible assets (non-GAAP)

   $ 1,921,897       $ 1,866,319       $ 1,737,543   
  

 

 

    

 

 

    

 

 

 


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 first quarter 2016 on Thursday, April 21, 2016, at 11:00 a.m. Pacific / 2:00 p.m. Eastern. To listen to the conference call, interested parties should call: (855) 215-7498 Passcode: 1554389. Following the formal remarks, a question and answer session will be open to all interested parties. The webcast will be available via Pacific Continental’s website 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 Shannon Coffin, executive administrative assistant, at 541-686-8685.

About Pacific Continental Bank

Pacific Continental Bank, the wholly-owned operating subsidiary of Pacific Continental Corporation, delivers highly personalized services through fourteen banking offices in Oregon and Washington. The Bank also operates loan production offices in Tacoma, Washington and Denver, Colorado. Pacific Continental, with approximately $2.0 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, the Seattle Business magazine 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”). These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “anticipates,” “targets,” “expects,” “estimates,” “intends,” “plans,” “goals,” “believes” and other similar expressions or future or conditional verbs such as “will,” “should,” “would” and “could.” The forward-looking statements made represent Pacific Continental’s current estimates, projections, expectations, plans or forecasts of its future results and revenues, including but not limited to statements about performance, loan or deposit growth, capital position, liquidity, credit quality, credit quality trends, competition, securities portfolio, anticipated interest savings from brokered time deposits, and economic conditions generally and the impact and effects of recent acquisitions. These statements are not guarantees of future results or performance and involve certain risks, uncertainties and assumptions that are difficult to predict and are often beyond Pacific Continental’s control. Actual outcomes and results may differ materially from those expressed in, or implied by, any of these forward-looking statements. You should not place undue reliance on any forward-looking statement and should consider all of the following uncertainties and risks, as well as those more fully discussed under “Risk Factors”, “Business”, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Pacific Continental’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and in any of Pacific Continental’s subsequent SEC filings, including the high concentration of loans of the Company’s banking subsidiary in commercial and residential real estate lending and in loans to dental professionals; adverse economic trends in the United States and the markets we serve affecting the Bank’s borrower base; continued erosion or sustained low levels of consumer confidence; changes in the Federal Reserve’s monetary policies and 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; operational systems or infrastructure failures; increased competition; fluctuating interest rates; a tightening of available credit; the potential adverse impact of legal or regulatory proceedings; and risks related to acquisitions, including integration, retention of key personnel and business, anticipated cost savings and results and performance of the acquired company or the combined entity. Pacific Continental Corporation undertakes no obligation to publicly revise or update any forward-looking statement to reflect the impact of events or circumstances that arise after the date of this release. This statement is included for the express purpose of invoking the PSLRA’s safe harbor provisions.


PACIFIC CONTINENTAL CORPORATION and subsidiary

Consolidated Income Statements

(In thousands, except share and per share amounts)

(Unaudited)

 

     Three months ended    

Linked

Quarter
% Change

   

Year over

Year
% Change

 
     March 31,
2016
    December 31,
2015
    March 31,
2015
     

Interest and dividend income

          

Loans

   $ 17,714      $ 17,674      $ 14,185        0.23     24.88

Taxable securities

     1,717        1,707        1,375        0.59     24.87

Tax-exempt securities

     477        485        503        -1.65     -5.17

Federal funds sold & interest-bearing deposits with banks

     45        11        5        309.09     800.00
  

 

 

   

 

 

   

 

 

     
     19,953        19,877        16,068        0.38     24.18
  

 

 

   

 

 

   

 

 

     

Interest expense

          

Deposits

     897        805        810        11.43     10.74

Federal Home Loan Bank & Federal Reserve borrowings

     189        191        228        -1.05     -17.11

Junior subordinated debentures

     56        57        56        -1.75     0.00

Federal funds purchased

     2        2        2        0.00     0.00
  

 

 

   

 

 

   

 

 

     
     1,144        1,055        1,096        8.44     4.38
  

 

 

   

 

 

   

 

 

     

Net interest income

     18,809        18,822        14,972        -0.07     25.63

Provision for loan losses

     245        520        —          -52.88     NA   
  

 

 

   

 

 

   

 

 

     

Net interest income after provision for loan losses

     18,564        18,302        14,972        1.43     23.99
  

 

 

   

 

 

   

 

 

     

Noninterest income

          

Service charges on deposit accounts

     693        705        575        -1.70     20.52

Bankcard income

     290        342        197        -15.20     47.21

Bank-owned life insurance income

     146        156        109        -6.41     33.94

Gain on sale of investment securities

     237        337        53        -29.67     347.17

Impairment losses on investment securities (OTTI)

     (17     (8     —          112.50     NA   

Other noninterest income

     458        476        342        -3.78     33.92
  

 

 

   

 

 

   

 

 

     
     1,807        2,008        1,276        -10.01     41.61
  

 

 

   

 

 

   

 

 

     

Noninterest expense

          

Salaries and employee benefits

     7,559        7,278        6,409        3.86     17.94

Premises and equipment

     1,115        1,126        980        -0.98     13.78

Data processing

     864        916        684        -5.68     26.32

Legal and professional fees

     611        538        400        13.57     52.75

Business development

     516        507        353        1.78     46.18

FDIC insurance assessment

     288        282        212        2.13     35.85

Other real estate expense

     10        42        241        -76.19     -95.85

Merger related expenses (1)

     —          —          1,836        NA        -100.00

Other noninterest expense

     1,044        1,017        857        2.65     21.82
  

 

 

   

 

 

   

 

 

     
     12,007        11,706        11,972        2.57     0.29
  

 

 

   

 

 

   

 

 

     

Income before provision for income taxes

     8,364        8,604        4,276        -2.79     95.60

Provision for income taxes

     2,905        3,076        1,474        -5.56     97.08
  

 

 

   

 

 

   

 

 

     

Net income

   $ 5,459      $ 5,528      $ 2,802        -1.25     94.83
  

 

 

   

 

 

   

 

 

     

Earnings per share:

          

Basic

   $ 0.28      $ 0.28      $ 0.15        0.00     86.67
  

 

 

   

 

 

   

 

 

     

Diluted

   $ 0.28      $ 0.28      $ 0.15        0.00     86.67
  

 

 

   

 

 

   

 

 

     

Weighted average shares outstanding:

          

Basic

     19,607,106        19,598,484        18,232,076       

Common stock equivalents attributable to stock-based awards

     175,176        167,368        212,895       
  

 

 

   

 

 

   

 

 

     

Diluted

     19,782,282        19,765,852        18,444,971       
  

 

 

   

 

 

   

 

 

     

PERFORMANCE RATIOS

          

Return on average assets

     1.12     1.16     0.72    

Return on average equity (book)

     9.92     10.10     5.91    

Return on average equity (tangible) (2)

     12.35     12.60     7.05    

Net interest margin—fully tax-equivalent yield (3)

     4.27     4.35     4.26    

Efficiency ratio (4)

     57.52     55.50     72.47    

 

(1) Represents expenses associated with the acquisition of Capital Pacific Bank, completed during the first quarter 2015.
(2) Tangible equity excludes goodwill and core deposit intangible assets related to acquisitions.
(3) Net interest margin is reported on a tax-equivalent yield basis at a 35% tax rate.
(4)  Efficiency ratio is noninterest expense as a percent of net interest income (on a tax-equivalent basis) plus noninterest income.

NA Not applicable


PACIFIC CONTINENTAL CORPORATION and subsidiary

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)

 

     March 31,
2016
    December 31,
2015
    March 31,
2015
    Linked
Quarter
% Change
    Year over
Year
% Change
 

ASSETS

          

Cash and due from banks

   $ 24,628      $ 23,819      $ 25,718        3.40     -4.24

Interest-bearing deposits with banks

     29,831        12,856        12,491        132.04     138.82
  

 

 

   

 

 

   

 

 

     

Total cash and cash equivalents

     54,459        36,675        38,209        48.49     42.53

Securities available-for-sale

     383,442        366,598        379,497        4.59     1.04

Loans, net of deferred fees

     1,429,734        1,404,482        1,254,706        1.80     13.95

Allowance for loan losses

     (17,596     (17,301     (15,724     1.71     11.91
  

 

 

   

 

 

   

 

 

     

Net Loans

     1,412,138        1,387,181        1,238,982       

Interest receivable

     6,003        5,721        5,387        4.93     11.43

Federal Home Loan Bank stock

     3,511        5,208        10,531        -32.58     -66.66

Property and equipment, net of accumulated depreciation

     18,900        18,014        17,932        4.92     5.40

Goodwill and intangible assets, net

     43,808        43,159        43,306        1.50     1.16

Deferred tax asset

     3,523        5,670        4,887        -37.87     -27.91

Other real estate owned

     11,747        11,747        14,167        0.00     -17.08

Bank-owned life insurance

     23,030        22,884        22,401        0.64     2.81

Other assets

     5,144        6,621        5,550        -22.31     -7.32
  

 

 

   

 

 

   

 

 

     

Total assets

   $ 1,965,705      $ 1,909,478      $ 1,780,849        2.94     10.38
  

 

 

   

 

 

   

 

 

     

LIABILITIES AND SHAREHOLDERS’ EQUITY

          

Deposits

          

Noninterest-bearing demand

   $ 675,296      $ 568,688      $ 503,735        18.75     34.06

Savings and interest-bearing checking

     887,873        889,802        833,325        -0.22     6.55

Core time deposits

     70,772        75,452        80,337        -6.20     -11.91
  

 

 

   

 

 

   

 

 

     

Total core deposits (2)

     1,633,941        1,533,942        1,417,397        6.52     15.28

Non-core time deposits

     62,647        63,151        79,350        -0.80     -21.05
  

 

 

   

 

 

   

 

 

     

Total deposits

     1,696,588        1,597,093        1,496,747        6.23     13.35

Securities sold under agreements to repurchase

     478        71        53        573.24     801.89

Federal Home Loan Bank borrowings

     30,500        77,500        61,000        -60.65     -50.00

Junior subordinated debentures

     8,248        8,248        8,248        0.00     0.00

Accrued interest and other payables

     5,012        8,075        4,150        -37.93     20.77
  

 

 

   

 

 

   

 

 

     

Total liabilities

     1,740,826        1,690,987        1,570,198        2.95     10.87
  

 

 

   

 

 

   

 

 

     

Shareholders’ equity

          

Common stock: 50,000,000 shares authorized. Shares issued and outstanding: 19,621,625 at March 31, 2016, 19,604,182 at December 31, 2015 and 19,496,920 at March 31, 2015

     156,703        156,099        155,298        0.39     0.90

Retained earnings

     62,996        59,693        50,014        5.53     25.96

Accumulated other comprehensive income

     5,180        2,699        5,339        91.92     -2.98
  

 

 

   

 

 

   

 

 

     
     224,879        218,491        210,651        2.92     6.75
  

 

 

   

 

 

   

 

 

     

Total liabilities and shareholders’ equity

   $ 1,965,705      $ 1,909,478      $ 1,780,849        2.94     10.38
  

 

 

   

 

 

   

 

 

     

CAPITAL RATIOS

          

Total capital (to risk weighted assets)

     12.46     12.58     13.08    

Tier I capital (to risk weighted assets)

     11.37     11.47     11.97    

Common equity tier 1 capital (to risk weighted assets)

     10.88     10.97     11.41    

Tier I capital (to leverage assets)

     9.75     9.93     11.31    

Tangible common equity (to tangible assets)(1)

     9.42     9.39     9.63    

Tangible common equity (to risk-weighted assets)(1)

     11.05     10.96     11.58    

OTHER FINANCIAL DATA

          

Shares outstanding at end of period

     19,621,625        19,604,182        19,496,920       

Tangible shareholders’ equity(1)

   $ 181,071      $ 175,332      $ 167,345       

Book value per share

   $ 11.46      $ 11.15      $ 10.80       

Tangible book value per share

   $ 9.23      $ 8.94      $ 8.58       

 

(1)  Tangible common equity excludes goodwill and core deposit intangible assets related to acquisitions.
(2)  Core deposits include demand, interest checking, money market, savings, and local time deposits, including local nonpublic time deposits in excess of $100 thousand.

 


PACIFIC CONTINENTAL CORPORATION and subsidiary

Loans by Type

(In thousands)

(Unaudited)

 

     March 31,
2016
    December 31,
2015
    March 31,
2015
   

Linked

Quarter

% Change

   

Year over

Year

% Change

 

LOANS BY TYPE

          

Real estate secured loans:

          

Permanent loans:

          

Multi-family residential

   $ 66,419      $ 66,445      $ 69,968        -0.04     -5.07

Residential 1-4 family

     51,356        53,776        55,702        -4.50     -7.80

Owner-occupied commercial

     373,002        364,742        337,058        2.26     10.66

Nonowner-occupied commercial

     320,485        300,774        256,119        6.55     25.13
  

 

 

   

 

 

   

 

 

     

Total permanent real estate loans

     811,262        785,737        718,847        3.25     12.86

Construction loans:

          

Multi-family residential

     8,747        7,027        7,318        24.48     19.53

Residential 1-4 family

     29,261        30,856        28,913        -5.17     1.20

Commercial real estate

     40,635        42,680        25,477        -4.79     59.50

Commercial bare land and acquisition & development

     20,518        20,537        11,987        -0.09     71.17

Residential bare land and acquisition & development

     6,562        7,268        6,272        -9.71     4.62
  

 

 

   

 

 

   

 

 

     

Total construction real estate loans

     105,723        108,368        79,967        -2.44     32.21
  

 

 

   

 

 

   

 

 

     

Total real estate loans

     916,985        894,105        798,814        2.56     14.79

Commercial loans

     505,845        501,976        449,793        0.77     12.46

Consumer loans

     2,948        3,351        3,528        -12.03     -16.44

Other loans

     5,525        6,580        3,742        -16.03     47.65
  

 

 

   

 

 

   

 

 

     

Gross loans

     1,431,303        1,406,012        1,255,877        1.80     13.97

Deferred loan origination fees

     (1,569     (1,530     (1,171     2.55     33.99
  

 

 

   

 

 

   

 

 

     
     1,429,734        1,404,482        1,254,706        1.80     13.95

Allowance for loan losses

     (17,596     (17,301     (15,724     1.71     11.91
  

 

 

   

 

 

   

 

 

     
   $ 1,412,138      $ 1,387,181      $ 1,238,982        1.80     13.98
  

 

 

   

 

 

   

 

 

     

SELECTED MARKET LOAN DATA

          

Eugene market gross loans, period-end

   $ 372,137      $ 379,048      $ 358,129        -1.82     3.91

Portland market gross loans, period-end

     684,025        667,995        612,762        2.40     11.63

Seattle market gross loans, period-end

     144,524        142,104        119,306        1.70     21.14

National health care gross loans, period-end (1)

     230,617        216,865        165,680        6.34     39.19
  

 

 

   

 

 

   

 

 

     

Total gross loans, period-end

   $ 1,431,303      $ 1,406,012      $ 1,255,877        1.80     13.97
  

 

 

   

 

 

   

 

 

     

DENTAL LOAN DATA (2)

          

Local dental gross loans, period-end

   $ 149,698      $ 145,817      $ 159,726        2.66     -6.28

National dental gross loans, period-end

     201,243        194,345        151,280        3.55     33.03
  

 

 

   

 

 

   

 

 

     

Total gross dental loans, period-end

   $ 350,941      $ 340,162      $ 311,006        3.17     12.84
  

 

 

   

 

 

   

 

 

     

 

(1) National health care loans include loans to health care professionals, primarily dental practitioners, operating outside of Pacific Continental Bank’s market area. The market area is defined as Oregon and Washington, West of the Cascade Mountain Range.
(2)  Dental loans include loans to dental professionals for the purpose of practice expansion, acquisition or other purpose, supported by the cash flows of a dental practice.

 


PACIFIC CONTINENTAL CORPORATION and subsidiary

Selected Other Financial Information and Ratios

(In thousands)

(Unaudited)

 

     Three months ended  
     March 31,
2016
    December 31,
2015
    March 31,
2015
 

BALANCE SHEET AVERAGES

      

Loans, net of deferred fees

   $ 1,420,582      $ 1,374,281      $ 1,093,381   

Allowance for loan losses

     (17,467     (16,820     (15,675
  

 

 

   

 

 

   

 

 

 

Loans, net of allowance

     1,403,115        1,357,461        1,077,706   

Securities, short-term deposits and FHLB stock

     417,439        401,870        381,204   
  

 

 

   

 

 

   

 

 

 

Earning assets

     1,820,554        1,759,331        1,458,910   

Noninterest-earning assets

     135,858        133,931        114,857   
  

 

 

   

 

 

   

 

 

 

Assets

   $ 1,956,412      $ 1,893,262      $ 1,573,767   
  

 

 

   

 

 

   

 

 

 

Interest-bearing core deposits(1)

   $ 988,876      $ 942,360      $ 760,838   

Noninterest-bearing core deposits(1)

     617,672        584,445        439,780   
  

 

 

   

 

 

   

 

 

 

Core deposits(1)

     1,606,548        1,526,805        1,200,618   

Noncore interest-bearing deposits

     63,683        59,986        82,986   
  

 

 

   

 

 

   

 

 

 

Deposits

     1,670,231        1,586,791        1,283,604   

Borrowings

     57,570        81,872        91,051   

Other noninterest-bearing liabilities

     7,186        7,501        6,772   
  

 

 

   

 

 

   

 

 

 

Liabilities

     1,734,987        1,676,164        1,381,427   
  

 

 

   

 

 

   

 

 

 

Shareholders’ equity (book)

     221,425        217,098        192,340   
  

 

 

   

 

 

   

 

 

 

Liabilities and equity

   $ 1,956,412      $ 1,893,262      $ 1,573,767   
  

 

 

   

 

 

   

 

 

 

Shareholders’ equity (tangible)(2)

   $ 177,814      $ 174,051      $ 161,247   
  

 

 

   

 

 

   

 

 

 

Period-end earning assets

   $ 1,825,411      $ 1,766,635      $ 1,630,970   
  

 

 

   

 

 

   

 

 

 

SELECTED MARKET DEPOSIT DATA

      

Eugene market core deposits, period-end(1)

   $ 790,435      $ 787,521      $ 742,397   

Portland market core deposits, period-end(1)

     649,089        552,283        516,976   

Seattle market core deposits, period-end(1)

     194,417        194,138        158,024   
  

 

 

   

 

 

   

 

 

 

Total core deposits, period-end(1)

     1,633,941        1,533,942        1,417,397   

Other deposits, period-end

     62,647        63,151        79,350   
  

 

 

   

 

 

   

 

 

 

Total

   $ 1,696,588      $ 1,597,093      $ 1,496,747   
  

 

 

   

 

 

   

 

 

 

Eugene market core deposits, average(1)

   $ 799,583      $ 783,391      $ 711,718   

Portland market core deposits, average(1)

     615,929        562,026        332,791   

Seattle market core deposits, average(1)

     191,036        181,388        156,109   
  

 

 

   

 

 

   

 

 

 

Total core deposits, average(1)

     1,606,548        1,526,805        1,200,618   

Other deposits, average

     63,683        59,986        82,986   
  

 

 

   

 

 

   

 

 

 

Total

   $ 1,670,231      $ 1,586,791      $ 1,283,604   
  

 

 

   

 

 

   

 

 

 

NET INTEREST MARGIN RECONCILIATION

      

Yield on average loans (3)

     5.15     5.22     5.34

Yield on average securities(4)

     2.57     2.55     2.35
  

 

 

   

 

 

   

 

 

 

Yield on average earning assets(4)

     4.52     4.60     4.57

Rate on average interest-bearing core deposits

     0.26     0.26     0.28

Rate on average interest-bearing non-core deposits

     1.67     1.30     1.41
  

 

 

   

 

 

   

 

 

 

Rate on average interest-bearing deposits

     0.34     0.32     0.39

Rate on average borrowings

     1.73     1.21     1.27
  

 

 

   

 

 

   

 

 

 

Cost of interest-bearing funds

     0.41     0.39     0.48
  

 

 

   

 

 

   

 

 

 

Interest rate spread(4)

     4.11     4.21     4.10
  

 

 

   

 

 

   

 

 

 

Net interest margin- fully tax equivalent yield(4)

     4.27     4.35     4.26
  

 

 

   

 

 

   

 

 

 

Acquired loan fair value accretion impact to net interest margin (5)

     0.09     0.15     0.11
  

 

 

   

 

 

   

 

 

 

 

(1)  Core deposits include demand, interest checking, money market, savings, and local time deposits, including local nonpublic time deposits in excess of $100 thousand.
(2)  Tangible equity excludes goodwill and core deposit intangible assets related to acquisitions.
(3) Interest income includes recognized loan origination fees of $205, $223, and $147 for the three months ended March 31, 2016, December 31, 2015, and March 31, 2015, respectively.
(4)  Tax-exempt income has been adjusted to a tax-equivalent basis at a 35% tax rate. The tax equivalent yield adjustment to interest earned on loans was $258, $199 and $82 for the three months ended March 31, 2016, December 31, 2015, and March 31, 2015 , respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $257, $261 and $271 for the three months ended March 31, 2016, December 31, 2015, and March 31, 2015 , respectively.
(5)  During the three months ended March 31, 2016, December 31, 2015, and March 31, 2015, accretion of the fair value adjustment on acquired loans contributed to interest income was $409, $671, and $369, respectively.


PACIFIC CONTINENTAL CORPORATION and subsidiary

Nonperforming Assets, Asset Quality Ratios and Allowance for Loan Losses

(Dollars in thousands)

(Unaudited)

 

     March 31,
2016
    December 31,
2015
    March 31,
2015
 

NONPERFORMING ASSETS

      

Non-accrual loans

      

Real estate secured loans:

      

Permanent loans:

      

Multi-family residential

   $ —        $ —        $ —     

Residential 1-4 family

     710        733        830   

Owner-occupied commercial

     2,309        2,369        1,117   

Nonowner-occupied commercial

     761        790        897   
  

 

 

   

 

 

   

 

 

 

Total permanent real estate loans

     3,780        3,892        2,844   

Construction loans:

      

Multi-family residential

     —          —          —     

Residential 1-4 family

     53        53        166   

Commercial real estate

     —          —          —     

Commercial bare land and acquisition & development

     —          —          —     

Residential bare land and acquisition & development

     —          —          —     
  

 

 

   

 

 

   

 

 

 

Total construction real estate loans

     53        53        166   
  

 

 

   

 

 

   

 

 

 

Total real estate loans

     3,833        3,945        3,010   

Commercial loans

     1,529        1,564        1,067   
  

 

 

   

 

 

   

 

 

 

Total nonaccrual loans

     5,362        5,509        4,077   

90-days past due and accruing interest

     —          —          —     

Total nonperforming loans

     5,362        5,509        4,077   
  

 

 

   

 

 

   

 

 

 

Nonperforming loans guaranteed by government

     (2,720     (2,790     (1,442

Net nonperforming loans

     2,642        2,719        2,635   
  

 

 

   

 

 

   

 

 

 

Other real estate owned

     11,747        11,747        14,167   
  

 

 

   

 

 

   

 

 

 

Total nonperforming assets, net of guaranteed loans

   $ 14,389      $ 14,466      $ 16,802   
  

 

 

   

 

 

   

 

 

 

ASSET QUALITY RATIOS 

      

Allowance for loan losses as a percentage of total loans outstanding

     1.23     1.23     1.25

Allowance for loan losses as a percentage of total nonperforming loans,

net of government guarantees

     666.01     636.30     596.74

Quarter-to-date net loan charge offs (recoveries) as a percentage

of average loans, annualized

     -0.01     -0.02     -0.03

Net nonperforming loans as a percentage of total loans

     0.18     0.19     0.21

Nonperforming assets as a percentage of total assets

     0.73     0.76     0.94

Consolidated classified asset ratio(1)

     20.96     23.03     27.60

Past due as a percentage of total loans (2)

     0.07     0.03     0.35
     Three months ended  
     March 31,     December 31,     March 31,  
     2016     2015     2015  

ALLOWANCE FOR LOAN LOSSES

      

Balance at beginning of period

   $ 17,301      $ 16,612      $ 15,637   

Provision for loan losses

     245        520        —     

Loan charge-offs

     —          (69     (73

Loan recoveries

     50        238        160   
  

 

 

   

 

 

   

 

 

 

Net recoveries

     50        169        87   
  

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 17,596      $ 17,301      $ 15,724   
  

 

 

   

 

 

   

 

 

 

 

(1) Consolidated 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.
(2)  Defined as loans past due more than 30 days and still accruing interest, as a percentage of total loans, net of deferred fees.


PACIFIC CONTINENTAL CORPORATION and subsidiary

Consolidated Financial Highlights

(Dollars in thousands, except share and per share data)

(Unaudited)

 

     1st Quarter     4th Quarter     3rd Quarter     2nd Quarter     1st Quarter  
     2016     2015     2015     2015     2015  

EARNINGS

          

Net interest income

   $ 18,809      $ 18,822      $ 18,308      $ 17,696      $ 14,972   

Provision for loan loss

   $ 245      $ 520      $ 625      $ 550      $ —     

Noninterest income

   $ 1,807      $ 2,008      $ 1,714      $ 1,627      $ 1,276   

Noninterest expense

   $ 12,007      $ 11,706      $ 11,182      $ 11,030      $ 11,972   

Net income

   $ 5,459      $ 5,528      $ 5,325      $ 5,095      $ 2,802   

Basic earnings per share

   $ 0.28      $ 0.28      $ 0.27      $ 0.26      $ 0.15   

Diluted earnings per share

   $ 0.28      $ 0.28      $ 0.27      $ 0.26      $ 0.15   

Average shares outstanding

     19,607,106        19,598,484        19,591,666        19,562,363        18,232,076   

Average diluted shares outstanding

     19,782,282        19,766,098        19,816,770        19,788,884        18,444,971   

PERFORMANCE RATIOS

          

Return on average assets

     1.12     1.16     1.14     1.14     0.72

Return on average equity (book)

     9.92     10.10     9.91     9.68     5.91

Return on average equity (tangible) (1)

     12.35     12.60     12.42     12.18     7.05

Net interest margin—fully tax equivalent yield (2)

     4.27     4.35     4.32     4.39     4.26

Efficiency ratio (tax equivalent) (3)

     57.52     55.50     55.12     56.30     72.47

Full-time equivalent employees

     322        322        321        322        317   

CAPITAL

          

Tier 1 leverage ratio

     9.75     9.93     9.88     10.01     11.31

Common Equity tier 1 ratio

     10.88     10.97     11.00     11.27     11.41

Tier 1 risk based ratio

     11.37     11.47     11.49     11.78     11.97

Total risk based ratio

     12.46     12.58     12.58     12.88     13.08

Book value per share

   $ 11.46      $ 11.15      $ 11.06      $ 10.82      $ 10.80   

Regular cash dividend per share

   $ 0.11      $ 0.11      $ 0.11      $ 0.10      $ 0.10   

ASSET QUALITY

          

Allowance for loan losses (ALL)

   $ 17,596      $ 17,301      $ 16,612      $ 16,013      $ 15,724   

Non performing loans (NPLs) net of government guarantees

   $ 2,642      $ 2,719      $ 2,231      $ 2,258      $ 2,635   

Non performing assets (NPAs) net of government guarantees

   $ 14,389      $ 14,466      $ 14,085      $ 14,924      $ 16,802   

Net loan (recoveries) charge offs

   $ (50   $ (169   $ 26      $ 261      $ (87

ALL as a percentage of gross loans

     1.23     1.23     1.23     1.23     1.25

ALL as a % NPLs, net of government guarantees

     666.01     636.30     744.60     709.17     596.74

Net loan charge offs (recoveries) to average loans

     -0.01     -0.02     0.00     0.05     -0.03

Net NPLs as a percentage of total loans

     0.18     0.19     0.16     0.17     0.21

Nonperforming assets as a percentage of total assets

     0.73     0.76     0.75     0.82     0.94

Consolidated classified asset ratio(4)

     20.96     23.03     25.14     26.52     27.60

Past due as a percentage of total loans (5)

     0.07     0.03     0.14     0.19     0.35

END OF PERIOD BALANCES

          

Total securities and short term deposits

   $ 413,273      $ 379,454      $ 398,366      $ 393,408      $ 391,988   

Total loans net of allowance

   $ 1,412,138      $ 1,387,181      $ 1,339,195      $ 1,288,919      $ 1,238,982   

Total earning assets

   $ 1,828,922      $ 1,771,843      $ 1,744,329      $ 1,687,795      $ 1,641,501   

Total assets

   $ 1,965,705      $ 1,909,478      $ 1,878,283      $ 1,830,942      $ 1,780,849   

Total non-interest bearing deposits

   $ 675,296      $ 568,688      $ 544,009      $ 531,697      $ 503,735   

Core deposits (7)

   $ 1,633,941      $ 1,533,942      $ 1,465,547      $ 1,445,218      $ 1,417,397   

Total deposits

   $ 1,696,588      $ 1,597,093      $ 1,524,954      $ 1,514,181      $ 1,496,747   

AVERAGE BALANCES

          

Total securities and short term deposits

   $ 417,439      $ 396,852      $ 400,428      $ 398,836      $ 371,061   

Total loans net of allowance

   $ 1,403,115      $ 1,357,461      $ 1,319,622      $ 1,257,366      $ 1,077,706   

Total earning assets

   $ 1,820,554      $ 1,759,331      $ 1,725,398      $ 1,664,945      $ 1,458,910   

Total assets

   $ 1,956,412      $ 1,893,262      $ 1,859,418      $ 1,800,527      $ 1,573,767   

Total non-interest bearing deposits

   $ 617,672      $ 584,445      $ 538,768      $ 508,259      $ 439,780   

Core deposits (6)

   $ 1,606,548      $ 1,526,805      $ 1,482,984      $ 1,409,836      $ 1,200,618   

Total deposits

   $ 1,670,231      $ 1,586,791      $ 1,545,465      $ 1,483,305      $ 1,283,604   

 

(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 as a percent of net interest income (on a tax-equivalent basis) plus noninterest income.
(4)  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.
(5)  Defined as loans past due more than 30 days and still accruing interest, as a percentage of total loans, net of deferred fees.
(6)  Core deposits include demand, interest checking, money market, savings, and local time deposits, including local nonpublic time deposits in excess of $100 thousand.