PMC Commercial Trust Announces Fourth Quarter and Year-End Financial Results
DALLAS, March 16 /PRNewswire-FirstCall/ -- PMC Commercial Trust (NYSE Amex: PCC) announced fourth quarter and year-end financial results today.
Compared to Fourth Quarter 2008
Income from continuing operations for the fourth quarter of 2009 decreased to $1,448,000 ($0.14 per share) from $2,285,000 ($0.21 per share) during the fourth quarter of 2008. Net income decreased to $1,676,000, or $0.16 per share, during the fourth quarter of 2009 compared to $2,291,000, or $0.21 per share, for the fourth quarter of 2008.
Compared to Third Quarter 2009
Our income from continuing operations decreased $21,000 to $1,448,000 ($0.14 per share) during the fourth quarter of 2009 from $1,469,000 ($0.14 per share) during the third quarter of 2009. Net income decreased by $219,000 to $1,676,000, or $0.16 per share, during the fourth quarter of 2009 compared to $1,895,000, or $0.18 per share, for the third quarter of 2009.
Compared to Year-End 2008
Income from continuing operations for 2009 decreased to $6,057,000 ($0.57 per share) from $9,022,000 ($0.84 per share) during 2008. Net income decreased to $6,761,000, or $0.64 per share, during 2009 compared to $9,806,000, or $0.91 per share, for 2008.
Management Remarks
Lance B. Rosemore, Chairman of the Board of Trust Managers, stated; "Because there continued to be a lack of liquidity in the marketplace, we redirected our efforts towards originating loans under the SBA 7(a) Program. The secondary market for these loans remains strong. Due in part to government programs and our increased emphasis, we were successful in ramping up our SBA 7(a) volume to $28 million in 2009 compared to $11 million in 2008. We anticipate originating between $30 and $40 million in these loans in 2010. Our year-end 2009 serviced portfolio totaled $273 million which was relatively unchanged from December 31, 2008.
"Even though our portfolio continues to perform relatively well with loan losses totaling only 0.5% of our retained portfolio, we did increase our loan loss reserves during 2009. We anticipate that overall economic weakness may continue for several quarters. Fortunately, we are beginning to see early indications of economic recovery, which should benefit our borrowers."
Financial Results
Fourth Quarter of 2009 vs. Fourth Quarter of 2008
Significant changes included:
- Revenues decreased by $1,234,000 when comparing the fourth quarter of 2009 to the fourth quarter of 2008 due primarily to:
- a reduction in interest income of approximately $940,000 resulting primarily from decreases in LIBOR;
- a reduction of income from retained interests in transferred assets ("Retained Interests") of approximately $629,000 resulting from the reduced outstanding balance of our Retained Interests; and
- a reduction in prepayment fee income of approximately $300,000; partially offset by
- an increase in premium income of approximately $700,000 from selling the guaranteed portion of SBA 7(a) loans in the secondary market.
- Expenses decreased by $221,000 during the fourth quarter of 2009 compared to the fourth quarter of 2008 due primarily to a reduction in interest expense of approximately $207,000 resulting from decreases in LIBOR.
- In October 2008, as a result of economic conditions, we announced cost reduction initiatives. These initiatives included streamlining our sales, credit and servicing, as well as outsourcing some functions. The plan resulted in severance related charges of $235,000 during the fourth quarter of 2008.
Fourth Quarter of 2009 vs. Third Quarter of 2009
Operations were comparable with a $21,000 decrease in income from continuing operations and a decrease in net income of $219,000. Specific changes were:
- Provisions and impairments decreased by $401,000 due primarily to impairments of $438,000 on our Retained Interests during the third quarter of 2009 compared to $37,000 during the fourth quarter of 2009; partially offset by
- An increase in general and administrative expenses of $313,000 primarily a result of costs incurred related to our assets in process of foreclosure.
Year Ended December 31, 2009 vs. Year Ended December 31, 2008
Net income decreased by $3,045,000 primarily due to:
- A decrease in our net interest margin of $2,230,000 primarily due to a decrease in LIBOR; and
- A decrease in yield generated from our Retained Interests of approximately $3,503,000 due to the attainment of "clean-up" call options causing a reduction in the weighted average balance of our Retained Interests and a reduction in the amount of fees received upon prepayment of the loans.
The above reductions in net income were partially offset by:
- A reduction in overhead (salaries and related benefits and general and administrative expenses) of $1,042,000 due primarily to our 2008 cost reduction initiatives; and
- A one-time charge for severance costs of $1,808,000 during 2008 as a result of our cost reduction initiatives announced in October 2008.
Interest Rate Sensitivity
- Approximately 67% of our retained loans at December 31, 2009 were based on LIBOR.
- The base LIBOR charged to our borrowers during the fourth quarter of 2009 was 0.29% compared to 0.60% during the third quarter of 2009 and 3.88% during the fourth quarter of 2008.
- The base LIBOR for the first quarter of 2010 has been set at 0.25%.
- The average base LIBOR charged to our borrowers during the year ended December, 2009 was 0.88% compared to 3.53% during the year ended December 31, 2008. Based on our weighted average outstanding LIBOR-based loans during 2009 of approximately $126 million, the impact of the 260 basis point drop in LIBOR was approximately $3.3 million reduction in interest income.
Financial Position
- Our total assets were relatively unchanged at $228.2 million at December 31, 2009 compared to $227.5 million at December 31, 2008 and $229.4 million at September 30, 2009.
- Our total serviced loan portfolio was $273.7 million at December 31, 2009 up from $267.9 million at September 30, 2009 and down from $275.5 million at December 31, 2008.
- Our outstanding retained loan portfolio was $198.2 million at December 31, 2009 down from $200.0 million at September 30, 2009 and up from $180.6 million at December 31, 2008.
Originations
- During the fourth quarter of 2009 we originated $11.8 million of SBA 7(a) loans compared to $8.4 million in the third quarter of 2009 and $4.0 million during the fourth quarter of 2008.
- During the year ended December 31, 2009, we originated $28.0 million of SBA 7(a) loans compared to $11.0 million during the 2008, a 155% increase.
- Our pipeline of outstanding loan commitments has increased to $20.7 million at December 31, 2009 from $10.0 million at December 31, 2008, a 107% increase.
- We anticipate our 2010 SBA 7(a) loan fundings to be between $30 million and $40 million.
Liquidity
- Our revolving credit facility ("Revolver") was extended as follows: (1) the amount available was reduced during 2010 from $45 million available during 2009, (2) we provided collateral as security to our lender and (3) the interest rate was increased from LIBOR plus 1.63% to LIBOR plus 3.00% or from the lender's prime rate less 0.75% to the lender's prime rate.
- The maximum amount available under our Revolver is currently $35 million.
- The amount available will be reduced by $5 million each quarter commencing June 30, 2010 at which time the available amount will be reduced to $30 million.
- The amount available under the Revolver will further reduce to $20 million on December 31, 2010 at which time the Revolver will also mature.
- There can be no assurance that we will be able to extend or replace our Revolver at maturity.
Dividends
- Regular quarterly dividends on our common shares of $0.705 were declared during 2009 which includes the regular quarterly dividend declared in December 2009 of $0.16 per share that was paid on January 11, 2010 to shareholders of record on December 31, 2009.
- We declared a $0.16 per common share dividend in March 2010 payable in April. There has been no additional guidance provided by the Board of Trust Managers for dividends to be declared in 2010.
- Since our inception in 1993, we have paid approximately $164.3 million in dividends or $22.52 per common share.
Financial Position Information
December 31, September 30, June 30, March 31, December 31,
2009 2009 2009 2009 2008
------------ ------------- -------- --------- ------------
(In thousands, except per share information)
Loans
receivable,
net $196,642 $198,712 $184,415 $193,194 $179,807
Retained
interests in
transferred
assets $12,527 $12,413 $25,399 $24,742 $33,248
Total assets $228,243 $229,367 $225,443 $233,558 $227,524
Debt $68,509 $69,693 $66,245 $71,574 $61,814
Total
beneficiaries'
equity $152,458 $152,756 $152,649 $153,023 $154,362
Shares
outstanding 10,548 10,548 10,548 10,587 10,695
Net asset
value per
share $14.45 $14.48 $14.47 $14.45 $14.43
PMC Commercial Trust and Subsidiaries
Comparative Results of Operations
Years Ended Three Months Ended
December 31, December 31,
------------------------- ------------------------
2009 2008 Inc (Dec) % 2009 2008 Inc (Dec) %
----- ---- ----------- ---- ---- -----------
(Dollars in thousands, except per share information)
Income:
Interest income $11,180 $14,540 (23%) $2,714 $3,654 (26%)
Income from retained
interests in
transferred assets 2,862 6,365 (55%) 493 1,122 (56%)
Other income 2,225 2,212 1% 960 625 54%
------- ------- ---- ------ ------ ------
Total revenues 16,267 23,117 (30%) 4,167 5,401 (23%)
------- ------- ---- ------ ------ ------
Expenses:
Interest 2,869 3,999 (28%) 629 836 (25%)
Salaries and related
benefits 3,871 4,705 (18%) 1,007 953 6%
General and
administrative 2,096 2,304 (9%) 716 510 40%
Severance and
related benefits - 1,808 (100%) - 235 (100%)
Impairments and
provisions 1,541 960 61% 430 469 (8%)
------- ------- ---- ------ ------ ------
Total expenses 10,377 13,776 (25%) 2,782 3,003 (7%)
------- ------- ---- ------ ------ ------
Income before income
tax benefit
(provision)
and discontinued
operations 5,890 9,341 (37%) 1,385 2,398 (42%)
Income tax benefit
(provision) 167 (319) (152%) 63 (113) (156%)
------- ------- ---- ------ ------ ------
Income from
continuing
operations 6,057 9,022 (33%) 1,448 2,285 (37%)
Discontinued
operations 704 784 (10%) 228 6 3,700%
------- ------- ---- ------ ------ ------
Net income $6,761 $9,806 (31%) $1,676 $2,291 (27%)
======= ======= ==== ====== ====== ======
Basic weighted
average shares
outstanding 10,573 10,767 10,548 10,754
======= ======= ====== ======
Basic and diluted
earnings per share:
Income from
continuing
operations $0.57 $0.84 $0.14 $0.21
Discontinued
operations 0.07 0.07 0.02 -
------- ------- ------ ------
Net income $0.64 $0.91 $0.16 $0.21
======= ======= ====== ======
PMC Commercial Trust and Subsidiaries
Quarterly Operating Results
Three Months Ended
----------------------------------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2009 2009 2009 2009 2008
-------- --------- -------- --------- --------
(In thousands)
Revenues:
Interest income $2,714 $2,830 $2,785 $2,851 $3,654
Income from
retained
interests in
transferred assets 493 672 781 916 1,122
Other income 960 735 306 224 625
------ ------ ------ ------ ------
Total revenues 4,167 4,237 3,872 3,991 5,401
------ ------ ------ ------ ------
Expenses:
Interest 629 644 790 806 836
Salaries and related
benefits 1,007 944 999 921 953
General and
administrative 716 403 534 443 510
Severance and
related benefits - - - - 235
Impairments and
provisions 430 831 73 207 469
------ ------ ------ ------ ------
Total expenses 2,782 2,822 2,396 2,377 3,003
------ ------ ------ ------ ------
Income before income
tax benefit
(provision) and
discontinued
operations 1,385 1,415 1,476 1,614 2,398
Income tax benefit
(provision) 63 54 68 (18) (113)
------ ------ ------ ------ ------
Income from
continuing
operations 1,448 1,469 1,544 1,596 2,285
Discontinued
operations 228 426 20 30 6
------ ------ ------ ------ ------
Net income $1,676 $1,895 $1,564 $1,626 $2,291
====== ====== ====== ====== ======
Real Estate Investment Trust ("REIT") Taxable Income
REIT taxable income is presented to assist investors in analyzing our performance and is a measure that is presented quarterly in our consolidated financial statements and is one of the factors utilized by our Board of Trust Managers in determining the level of dividends to be paid to our shareholders.
The following reconciles net income to REIT taxable income:
Years Ended Three Months Ended
December 31, December 31,
------------------------------ ------------------
2009 2008 2007 2009 2008
------ ------ ------ ------ ------
(In thousands)
Net income $6,761 $9,806 $13,135 $1,676 $2,291
Book/tax
difference
on
depreciation (56) (60) (65) (14) (15)
Book/tax
difference
on gains
related to
real estate (1,110) (784) 236 (468) (6)
Book/tax
difference
on Retained
Interests,
net (212) 57 1,631 (146) 60
Severance
accrual
(payments) (1,435) 1,596 - (6) 23
Impairment
losses - - 233 - -
Book/tax
difference
on rent and
related
receivables - - (1,152) - -
Book/tax
difference
on
amortization
and
accretion (232) (345) (239) (31) (173)
Loan
valuation 497 430 (299) 258 324
Other book/
tax
differences,
net (38) (177) 189 43 (147)
------ ------- ------- ------ ------
4,175 10,523 13,669 1,312 2,357
Less:
taxable REIT
subsidiaries
net loss
(income) 413 (587) (852) 145 (195)
Dividend
distribution
from taxable
REIT
subsidiary - 2,000 - - -
------ ------- ------- ------ ------
REIT taxable
income $4,588 $11,936 $12,817 $1,457 $2,162
====== ======= ======= ====== ======
Distributions
declared $7,445 $10,908 $12,915 $1,688 $3,904
====== ======= ======= ====== ======
Weighted
average
common
shares
outstanding 10,573 10,767 10,760 10,573 10,767
====== ======= ======= ====== ======
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.
SOURCE PMC Commercial Trust
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