EX-99.1 2 ex99-1.htm EXHIBIT 99.1 ex99-1.htm
 


CONTACTS

Gary L. Nalbandian
Mark A. Zody
Chairman/President
Chief Financial Officer
(717) 412-6301
 
 
PENNSYLVANIA COMMERCE BANCORP
 
CORE DEPOSITS GROW 11%, LOANS INCREASE 20%
 

July 19, 2007 – Harrisburg, PA – Pennsylvania Commerce Bancorp, Inc. (NASDAQ Global Select Market Symbol: COBH), parent company of Commerce Bank/Harrisburg, N.A., reported increased assets, deposits, and loans for the second quarter of 2007, announced Gary L. Nalbandian, Chairman.
                   
 
SECOND QUARTER FINANCIAL HIGHLIGHTS   
    
 
June 30, 2007      
  
             
%
    
             
Change (1)
    
                   
                   
   
* Total Assets:
  
 $    1.92
 Billion
  
7%
    
                   
   
* Total Core Deposits:
  
 $    1.51
 Billion
  
11%
    
                   
   
* Total Loans (net):
  
 $    1.07
 Billion
  
20%
    
                   
                   
   
* Total Revenues:
  
 $    20.0
 Million
  
11%
    
                   
   
* Net Income:
  
 $     1.6
 Million
  
(23)%
    
                   
   
*Diluted Net Income Per Share
  
 $    0.24
    
(25)%
    
                   
   
(1)Compared to Second Quarter Ended June 30, 2006
      
                   


Chairman’s Statement

In commenting on the Company’s financial results, Chairman Nalbandian noted the following financial highlights:

Ø  
Total assets increased to $1.92 billion.

Ø  
Core deposits grew $154  million, or 11%, over the previous 12-month period.

Ø  
Commercial core deposits grew 21%  and now total $545 million.

Ø  
Net loans grew $182  million, or 20%, over the second quarter one year ago.

Ø  
Asset quality remains strong with net charge-offs for the quarter of only 0.01% and a non-performing loan coverage ratio of 278%.

Ø  
Total revenues grew 11% for the quarter to $20.0 million, despite the challenging interest rate environment.

Ø  
Deposit charges and service fees grew 21% for the second quarter.

Ø  
Net income was $1.6 million and diluted net income per share was $0.24 for the second quarter of 2007.

Ø  
Shareholder equity increased $11.1 million, or 12%, to $104.7 million.

Ø  
Book value per share grew 10%  to $16.60.


Expansion Plans

Ø  
The Company recently opened its 31st store on July 14, 2007, located at 2799 Shillington Road, in Berks County, Pennsylvania.

Ø  
Consistent with its growth retail model, the Company plans to open a total of three new stores in 2007.

Ø  
Pennsylvania Commerce Bancorp is an independent member of the “Commerce Bank Network,” a network of banks established by Commerce Bancorp, Inc. (NYSE: CBH) based in Cherry Hill, N.J.

Balance Sheet

   
06/30/07
  
06/30/06
  
% Increase
   
(dollars in thousands)
    
             
Total Assets:
  
 $   1,915,463
  
 $ 1,783,933
  
     7%
             
Total Loans (net):
      1,070,353
  
       888,391
  
   20%
             
Core Deposits:
  
      1,514,453
  
    1,360,195
  
    11%
 
            
Total Deposits:
  
      1,532,449
  
    1,416,490
  
     8%

2


Deposits

The Company’s deposit growth continues with core deposits at June 30, 2007 reaching $1.51 billion, a $154.3 million, or 11%, increase over core deposits of $1.36 billion one year ago.  Total deposits grew by $116.0 million, or 8%, over the previous 12 months.


   
06/30/07
  
06/30/06
  
$ Increase
  
% Increase
   
(dollars in thousands)
        
                 
Core Deposits:
  
 $    1,514,453
  
 $ 1,360,195
  
 $ 154,258
  
11%
                 
Total Deposits:
  
       1,532,449
  
    1,416,490
  
    115,959
  
8%

Core Deposits

Core deposit growth by type of account is as follows:
           
%
  
2nd Qtr 2007
   
06/30/07
  
6/30/06
  
Increase
  
Cost of Funds
   
(dollars in thousands)
        
                 
Demand Non-Interest
  
 $    293,264
  
 $    279,870
  
    5%
  
   0.00%
                 
Demand Interest Bearing
  
       654,648
  
       517,664
  
26
  
3.65
                 
Savings
  
       384,445
  
       370,118
  
  4
  
2.53
                 
      Subtotal
  
    1,332,357
  
    1,167,652
  
14
  
2.58
                 
Time
  
       182,096
  
       192,543
  
(5)
  
4.25
                 
      Total Core Deposits
  
 $ 1,514,453
  
 $ 1,360,195
  
11%
  
   2.79%

Core deposit growth by type of customer is as follows:

       
%
      
%
  
%
   
06/30/07
  
Total
  
06/30/06
  
Total
  
Increase
   
(dollars in thousands)      
                     
Consumer
  
 $    621,620
  
   41%
  
 $    608,177
  
   45%
  
     2%
                     
Commercial
  
       545,418
  
36
  
       451,869
  
33
  
21
                     
Government
  
       347,415
  
23
  
       300,149
  
22
  
16
                     
            Total
  
 $ 1,514,453
  
100%
  
 $ 1,360,195
  
100%
  
   11%
 

3
 
Lending

Total loans increased $182.6 million, or 20%, to $1.08 billion from $898 million one year ago, and the growth was represented across all loan categories. The composition of the Company’s loan portfolio is as follows:
 
   
06/30/07
  
% of Total
    
06/30/06
  
% of Total
    
$ Increase
  
% Increase
   
(dollars in thousands)          
                             
Commercial
  
 $    330,300
  
    31%
    
 $ 250,967
  
    30%
    
 $   58,848
  
   22%
Owner Occupied
  
       129,856
  
12
    
    116,739
  
13
    
      13,117
  
11
                             
    Total Commercial
  
       460,156
  
43
    
    367,706
  
43
    
      71,965
  
19
                             
Consumer/Residential
  
       294,681
  
27
    
    265,084
  
30
    
      29,597
  
11
Commercial Real Estate
  
       325,874
  
30
    
    265,278
  
27
    
      81,081
  
33
                             
     Gross Loans
  
 $ 1,080,711
  
100%
    
 $ 898,068
  
100%
    
 $ 182,643
  
   20%

Asset Quality

The Company’s asset quality ratios are highlighted below:

   
Quarter Ended   
   
6/30/2007
  
3/31/2007
  
6/30/2006
             
Non-Performing Assets/Assets
  
0.21%
  
0.20%
  
0.19%
Net Loan Charge-Offs/Avg Total Loans
  
0.01%
  
0.02%
  
0.06%
Loan Loss Reserve/Gross Loans
  
0.96%
  
0.95%
  
1.08%
Non-Performing Loan Coverage
  
278%
  
280%
  
306%
Non-Performing Assets/Capital
            
     and Reserves
  
3%
  
3%
  
3%

Non-performing assets and loans past due 90 days at June 30, 2007 totaled $4.0 million, or 0.21%, of total assets, versus $3.9 million, or 0.20% of total assets, at March 31, 2007 and $3.3 million, or 0.19%, of total assets one year ago.

Income Statement
 
   
Three Months Ended  
  
Six Months Ended  
   
June 30    
  
June 30    
           
%
          
%
   
2007
  
2006
  
Change
  
2007
  
2006
  
Change
   
(dollars in thousands, except per share data)
(dollars in thousands, except per share data)
                         
Total Revenues:
  
 $   19,959
  
 $ 18,062
  
   11%
  
 $38,357
  
 $35,517
  
     8%
                         
Total Expenses:
  
      17,308
  
    14,498
  
19
  
   33,798
  
   28,423
  
19
                         
Net Income:
  
        1,571
  
     2,050
  
(23)
  
     2,683
  
     4,087
  
(34)
                         
Diluted Net Income Per Share:
  
 $       0.24
  
 $    0.32
  
  (25)%
  
 $    0.41
  
 $    0.64
  
  (36)%
 
 
 
4
 
Net Income and Net Income Per Share

Net income totaled $1.6 million for the second quarter of 2007 as compared to net income of $2.1 million for the second quarter of 2006. Net income per fully diluted share for the second quarter was $0.24 vs. $0.32 recorded for the same period a year ago.
 
   
Three Months Ended  
  
Six Months Ended  
   
June 30    
  
June 30    
           
%
          
%
   
2007
  
2006
  
Change
  
2007
  
2006
  
Change
   
(dollars in thousands, except per share data)
(dollars in thousands, except per share data)
                         
Net Income:
  
 $      1,571
  
 $    2,050
  
(23)%
  
 $  2,683
  
 $  4,087
  
(34)%
                         
Diluted Net Income
                        
Per Share:
  
 $        0.24
  
 $      0.32
  
(25)%
  
 $    0.41
  
 $    0.64
  
(36)%

Total Revenues

 
   
Three Months Ended   
  
 Six Months Ended  
  
   
June 30     
  
June 30    
  
                             
   
2007
  
2006
  
 % Increase
  
2007
  
2006
  
 % Increase
  
   
(dollars in thousands)   
  
(dollars in thousands)  
  
                             
Total Revenues:
  
 $  19,959
  
 $  18,062
  
11%
    
 $ 38,357
  
 $ 35,517
  
8%
  
 
Total revenues (net interest income plus non-interest income) for the second quarter increased $1.9 million, to $20.0 million, an 11% increase over the second quarter of 2006. Total revenues for the first six months of 2007 increased by $2.8 million, or 8%, over the same period in 2006.

Net Interest Income and Net Interest Margin

Net interest income for the second quarter of 2007 totaled $14.3 million, compared to the $13.4 million recorded a year ago.  This increase was a result of the continued strong loan growth and in spite of the difficult interest rate environment.  For the first six months of 2007, net interest income totaled $27.5 million, up $837,000, or 3%, over the $26.6 million recorded for the first half of 2006.

The net interest margin for the second quarter of 2007 was 3.19%, up 15 bps over the 3.04% figure recorded in the first quarter of 2007, and compared to 3.26% for the second quarter of 2006.  The year over year compression is primarily a result of the current interest rate environment.

Net interest income, on a tax equivalent basis, totaled $14.6 million in the second quarter of 2007, an increase of $973,000, or 7%, over the second quarter one year ago.  This figure was up $1.1 million over net interest income on a fully taxable basis recorded in the first quarter of 2007.

5


Net Interest Income and Rate/Volume Analysis

As shown below, the increase in net interest income on a tax equivalent basis was due to volume increases in the Company’s earning assets, which were fueled by the Company’s continued growth of core deposits.  The Company continues to grow core deposits, which has produced growth in net interest income, despite net interest margin compression brought on by the current interest rate environment.
 
   
Net Interest Income    
Quarter Ended
  
Volume
  
Rate
  
Total
  
%
June 30
  
Increase
  
Change
  
Increase
  
Increase
   
(dollars in thousands)  
    
                 
2007 vs. 2006
  
 $     1,174
  
 $        (201)
  
 $    973
  
7%

Non-Interest Income

Non-interest income for the second quarter of 2007 increased to $5.7 million from $4.6 million a year ago, a 24% increase.  The growth in non-interest income for the second quarter was reflected in increased deposit charges and service fees as depicted below:

 
   
Three Months Ended  
  
Six Months Ended  
   
June 30    
  
June 30    
           
%
          
%
   
2007
  
2006
  
Change
  
2007
  
2006
  
Change
   
(dollars in thousands)
      
(dollars in thousands)
    
                         
Deposit Charges
                        
& Service Fees
  
 $  5,073
  
 $4,204
  
21%
  
 $  9,575
  
 $7,925
  
21%
                         
Other Income
  
        632
  
      410
  
54%
  
     1,129
  
      947
  
19%
                         
           Subtotal
  
     5,705
  
   4,614
  
24%
  
   10,704
  
   8,872
  
21%
                         
Net Investment Securities Gains
  
             -
  
           -
      
        171
  
           -
    
                         
Total Non-Interest Income
  
 $  5,705
  
 $4,614
  
24%
  
 $10,875
  
 $8,872
  
23%
 
Non-Interest Expenses
 
Non-interest expenses for the second quarter of 2007 were $17.3 million, up 19% from $14.5 million one year ago.  The increases in non-interest expenses for the quarter were widespread across all categories, reflecting the Company’s continued growth.  Included in non-interest expenses for the second quarter of 2007 are costs related to two new stores opened in Lancaster County in November 2006, as well as training and start-up costs for the new store recently opened on Shillington Road in Berks County.  Also contributing to the increase is a higher level of regulatory fees as well as FDIC insurance assessments that were reintroduced to the Banking Industry starting January 1, 2007.

Non-interest expenses for the first six months of 2007 totaled $33.8 million, up $5.4 million, or 19%, over the $28.4 million recorded during the same period in 2006.  This increase was attributable to the same costs as discussed in the previous paragraph.



6


Investments

At June 30, 2007, the Company’s investment portfolio totaled $657 million. Detailed below is information regarding the composition and characteristics of the Company’s investment portfolio at June 30, 2007.
 
   
Available
  
Held to
    
Product Description
  
for Sale
  
Maturity
  
Total
(in thousands)      
Mortgage-backed Securities:
            
             
    Federal Agencies Pass Through
            
    Certificates (AAA Rated)
  
 $      74,676
  
 $   87,911
  
 $ 162,587
             
    Collateralized Mortgage
            
    Obligations (AAA Rated)
  
       278,774
  
      35,511
  
    314,285
             
U.S. Government Agencies/
            
Other
  
           4,703
  
    175,545
  
    180,248
             
                Total
  
 $    358,153
  
 $ 298,967
  
 $ 657,120
             
Duration (in years)
  
3.6
 
4.8
  
4.1
             
Average Life (in years)
  
4.5
  
6.2
  
5.3
             
Quarterly Average Yield
  
5.35%
  
5.27%
  
5.31%
 
At June 30, 2007, the after tax depreciation of the Company’s available for sale portfolio was $5.5 million.

Capital

Stockholders’ equity at June 30, 2007 totaled $104.7 million, an increase of $11.1 million, or 12%, over stockholders’ equity of $93.6 million at June 30, 2006.  Return on average stockholders’ equity (ROE) for the first quarter ending June 30, 2007 and 2006 are shown below:

 
Return on Equity    
             
Three Months Ended
  
Six Months Ended
             
06/30/07
  
06/30/06
  
06/30/07
  
06/30/06
             
6.00%
  
8.83%
  
5.21%
  
8.88%

The Company’s capital ratios at June 30, 2007 were as follows:

   
Commerce
    
Regulatory Guidelines
“Well Capitalized”
  
Leverage Ratio
     7.22 %     5.00 %
Tier 1
    
10.03
      
6.00
  
Total Capital
    
10.78
      
10.00
  



7


Shareholder Returns 

 
As of June 30, 2007  
       
 
Commerce
  
NASDAQ Bank Index
       
1 Year
(12)%
  
1%
       
3 Years
5%
  
5%
       
5 Years
6%
  
8%
       
10 Years
14%
  
9%




8



FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION

The Company may, from time to time, make written or oral “forward-looking statements”, including statements contained in the Company’s filings with the Securities and Exchange Commission (including the annual report on Form 10-K and the exhibits thereto), in its reports to stockholders and in other communications by the Company, which are made in good faith by the Company pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.
 
These forward-looking statements include statements with respect to the Company’s beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors (some of which are beyond the Company’s control). The words “may”, “could”, “should”, “would”, “believe”, “anticipate”, “estimate”, “expect”, “intend”, “plan” and similar expressions are intended to identify forward-looking statements. The following factors, among others, could cause the Company’s financial performance to differ materially from that expressed in such forward-looking statements:
 
·  
the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations;
·  
the effects of, and changes in, trade, monetary and fiscal policies, including interest rate policies of the Board of Governors of the Federal Reserve System;
·  
inflation;
·  
interest rate, market and monetary fluctuations;
·  
the timely development of competitive new products and services by the Company and the acceptance of such products and services by customers;
·  
the willingness of customers to substitute competitors’ products and services for the Company’s products and services and vice versa;
·  
the impact of changes in financial services’ laws and regulations (including laws concerning taxes, banking, securities and insurance);
·  
the impact of the rapid growth of the Company;
·  
the Company’s dependence on Commerce Bancorp, Inc. to provide various services to the Company;
·  
changes in the Company’s allowance for loan losses;
·  
effect of terrorists attacks and threats of actual war;
·  
unanticipated regulatory or judicial proceedings;
·  
changes in consumer spending and saving habits;
·  
and the success of the Company at managing the risks involved in the foregoing.
 
Because such forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such statements. The Company cautions that the foregoing list of important factors is not exclusive. The Company does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on behalf of the Company. For information, concerning events or circumstances after the date of this report refer to the Company’s filings with the Securities and Exchange Commission (“SEC”).
 
 
 
9