PMC Commercial Trust Announces Fourth Quarter and Year-End Financial Results

 PMC Commercial Trust Announces Fourth Quarter and Year-End Financial Results

PR Newswire

DALLAS, March 15, 2013

DALLAS, March 15, 2013 /PRNewswire/ -- PMC Commercial Trust (NYSE MKT: PCC)
announced fourth quarter and year-end financial results today.

Year End Overview:

  oWe had a loss from continuing operations of $1,356,000 ($0.13 loss per
    share) and a net loss of $2,179,000 ($0.21 loss per share) for the year
    ended December 31, 2012.
  oThe primary reasons for the loss in 2012 were costs of $3,870,000 related
    to the evaluation of strategic alternatives and an expense of $2,114,000
    for severance and related benefits related to the departure of our former
    Chief Executive Officer.
  oOur operating income and net income (before strategic alternative and
    severance costs) were $4,628,000 and $3,805,000, respectively, during the
    year ended 2012.
  oDuring 2011, our income from continuing operations was $4,692,000 ($0.44
    per share) and our net income was $3,647,000 ($0.34 per share).
  oAdjusting for strategic alternative costs of $778,000 incurred in 2011,
    our operating income and net income during 2011 were $5,470,000 and
    $4,425,000, respectively. 
  oThe primary reason for the $842,000 decrease in our operating income and
    $620,000 decrease in net income (before strategic alternative costs and
    severance costs) was an increase in our provision for loan losses which
    increased by $1,474,000 to $1,934,000 during 2012 from $460,000 in 2011.
  oPartially offsetting the increase in provision for loan losses were (1) an
    increase in premium income recognized of $439,000 and (2) decreased losses
    from discontinued operations, net of tax, of $222,000.

Fourth Quarter Overview:

  oWe had a loss from continuing operations of $1,902,000 ($0.18 loss per
    share) and a net loss of $2,082,000 ($0.20 per share) for the quarter
    ended December 31, 2012.
  oDuring the quarter ended December 31, 2012, our loss from continuing
    operations and net loss included $247,000 of expenses related to the
    evaluation of strategic alternatives and $2,114,000 of severance and
    related benefits expense. The special committee formed to evaluate
    strategic alternatives was disbanded in the fourth quarter of 2012.
  oBefore the impact of strategic alternative and severance costs, our income
    from continuing operations was $459,000 during the fourth quarter of 2012
    compared to $1,818,000 during the fourth quarter of 2011.
  oThe primary reason for the reduction in operating income and net income
    was an increase in our provision for loan losses that increased by
    $1,190,000 to $1,288,000 during the fourth quarter of 2012 from $98,000
    during the fourth quarter of 2011.

Portfolio Overview:

  oTotal serviced loan portfolio increased to $313.5 million at December 31,
    2012 up from $311.2 million at September 30, 2012 and $297.5 million at
    December 31, 2011
  oDuring the fourth quarter of 2012 we originated $7.2 million of SBA 7(a)
    loans compared to $9.5 million in the third quarter of 2012 and $12.3
    million during the fourth quarter of 2011
  oDuring the year ended December 31, 2012, we originated $34.8 million of
    SBA 7(a) loans compared to $33.7 million during 2011

Management Remarks

Jan F. Salit, Chairman of the Board of Trust Managers, stated, "As previously
released, the special committee and its advisors, after extensive discussions
and due diligence, concluded that it was necessary to terminate its
discussions with a potential strategic partner. The costs associated with
this evaluation and process had a significant negative impact on our bottom
line.

"In 2012, we continued to focus on SBA 7(a) originations primarily to the
hospitality industry. This program provides PMC with the most efficient
utilization of funds as we sell the government guaranteed portion of each loan
into the secondary market. During 2012, we funded approximately $35 million
of SBA 7(a) loans and anticipate our fundings to increase to between $40
million and $50 million in 2013. We anticipate total loan fundings to be
between $55 million and $65 million in 2013 with the sources of the non-7(a)
fundings being SBIC debentures and selective use of our revolving credit
facility.

"Although recent performance and the outlook of the hospitality industry
appears strong, certain regional markets continue to be affected negatively in
this economy. As a result, during the year-end loan valuation review, we
increased loan loss reserves primarily as a result of the deterioration of the
performance of a few problem loans."

Financial Results

Fourth Quarter of 2012 vs. Fourth Quarter of 2011

The Operating Loss for the fourth quarter of 2012 was $1,902,000 (a loss of
$0.18 per share) compared to Operating Income of $1,101,000 ($0.10 per share)
during the fourth quarter of 2011. Our Net Loss was $2,082,000, (a loss of
$0.20 per share) during the fourth quarter of 2012 compared to Net Income of
$659,000 ($0.06 per share), for the fourth quarter of 2011.

The primary reason for the reduction in Operating Income (Loss) and Net Income
(Loss) of $3,003,000 and $2,741,000, respectively, were severance and related
benefits expense of $2,114,000 incurred during the fourth quarter of 2012 and
an increase in provision for loan losses of $1,190,000 from $98,000 during the
fourth quarter of 2011 to $1,288,000 during the fourth quarter of 2012.

Partially offsetting these reductions in earnings was a decrease in strategic
alternative costs of $470,000 from $717,000 during the fourth quarter of 2011
to $247,000 during the fourth quarter of 2012. In addition, we had a
reduction in losses from our discontinued operations, net of tax, of $262,000
during the fourth quarter of 2012 compared to the fourth quarter of 2011 as a
result of reduced impairment charges and a deferred tax benefit during 2012 on
our real estate owned ("REO").

Fourth Quarter of 2012 vs. Third Quarter of 2012

Our Operating Income (Loss) decreased by $2,547,000 to ($1,902,000) (($0.18)
per share) during the fourth quarter of 2012 from $645,000 ($0.06 per share)
during the third quarter of 2012. Our Net Income (loss) decreased by
$2,555,000 to ($2,082,000), or ($0.20) per share, during the fourth quarter of
2012 compared to $473,000, or $0.04 per share, for the third quarter of 2012.
While costs associated with evaluation of strategic alternatives decreased by
$1,174,000, the benefit was offset by severance and related benefits expense
of $2,114,000 and an increase of $1,235,000 in provision for loan losses.

Interest Rate Sensitivity

  oApproximately 83% of our retained loans at December 31, 2012 had variable
    interest rates.
  oApproximately 53% of our retained loans at December 31, 2012 had interest
    rates based on LIBOR.
  oThe base LIBOR charged to our borrowers during the fourth quarter of 2012
    was 0.36% compared to 0.46% during the third quarter of 2012 and 0.37%
    during the fourth quarter of 2011.
  oThe base LIBOR for the first quarter of 2013 has been set at 0.31%.
  oThe average base LIBOR charged to our borrowers during 2012 was 0.47%
    compared to 0.31% during 2011.

Financial Position

  oOur total assets decreased to $247.7 million at December 31, 2012 compared
    to $254.3 million at September 30, 2012 and $251.2 million at December 31,
    2011.
  oOur total serviced loan portfolio increased to $313.5 million at December
    31, 2012 up from $311.2 million at September 30, 2012 and $297.5 million
    at December 31, 2011.
  oOur outstanding retained loan portfolio decreased to $242.1 million at
    December 31, 2012 from $243.7 million at September 30, 2012 and up from
    $236.1 million at December 31, 2011.

Originations

  oDuring the fourth quarter of 2012 we originated $7.2 million of SBA 7(a)
    loans compared to $9.5 million in the third quarter of 2012 and $12.3
    million during the fourth quarter of 2011.
  oDuring the year ended December 31, 2012, we originated $34.8 million of
    SBA 7(a) loans compared to $33.7 million during 2011.
  oDuring the years ended December 31, 2012 and 2011, our total loan
    originations were $54.2 million and $38.4 million, respectively.
  oOur pipeline of outstanding loan commitments was $19.5 million at December
    31, 2012 compared to $14.3 million at December 31, 2011.
  oWe anticipate our 2013 SBA 7(a) loan fundings to be between $40 million
    and $50 million and total fundings between $55 million and $65 million.

Liquidity

  oOur unsecured revolving credit facility (the "Revolver") matures June 30,
    2014. The interest rate is prime less 50 basis points or the 30-day LIBOR
    plus 2%, at our option. The amount available under the Revolver increased
    as scheduled from $35 million to $40 million on January 1, 2013.
  oWe had $11.9 million and $17.8 million outstanding on our Revolver at
    December 31, 2012 and 2011, respectively.

Dividends

  oDividends on our common shares of $0.60 were declared during 2012 which
    includes the quarterly dividend declared in December 2012 of $0.12 per
    share that was paid on January 7, 2013 to shareholders of record on
    December 31, 2012.
  oOur 2012 distributions were 100% return of capital from an income tax
    perspective.
  oWe declared a first quarter 2013 dividend of $0.125 per share payable on
    April 8, 2013 to shareholders of record on March 29, 2013.
  oSince our inception in 1993, we have paid approximately $184.2 million in
    dividends or $24.40 per common share.



Financial Position Information
                           December  September  June 30,   March 31,  December
                           31,       30,                              31,
                           2012      2012       2012       2012       2011
                           (In thousands, except per share information)
Loans receivable, net      $       $ 241,914  $ 243,759  $         $ 
                           238,991                        235,744   234,427
Total assets               $       $ 254,344  $ 254,853  $         $ 
                           247,707                        247,298   251,247
Debt                       $      $ 100,544  $ 101,470  $        $  
                           97,168                         93,799    95,861
Total beneficiaries'       $       $ 141,658  $ 142,879  $         $ 
equity                     138,326                        144,982   146,836
Total equity               $       $ 142,558  $ 143,779  $         $ 
                           139,226                        145,882   147,736
Shares outstanding         10,590    10,590     10,590     10,585     10,575
Net asset value per share  $13.15    $13.46     $13.58     $13.78     $13.97



PMC Commercial Trust and Subsidiaries
Comparative Results of Operations
                   Years Ended December 31,       Three Months Ended December
                                                  31,
                   2012       2011       Inc      2012       2011      Inc
                                         (Dec) %                       (Dec) %
                   (Dollars in thousands, except per share information)
Income:
Interest income    $ 13,896   $ 13,571   2%       $ 3,504    $ 3,473   1%
Premium income       1,889      1,450    30%        702        649     8%
Other income         1,280      1,055    21%        244        242     1%
 Total revenues    17,065     16,076   6%         4,450      4,364   2%
Expenses:
Interest             3,538      3,693    (4%)       892        822     9%
Salaries and         4,273      4,329    (1%)       923        1,066   (13%)
related benefits
General and          2,127      2,010    6%         634        408     55%
administrative
Strategic            3,870      778      397%       247        717     (66%)
alternatives
Severance and        2,114      -        -          2,114      -       -
related benefits
Provision for        1,934      460      320%       1,288      98      1,214%
loan losses, net
 Total expenses    17,856     11,270   58%        6,098      3,111   96%
Income (loss)
before income tax
provisionand        (791)      4,806    (116%)     (1,648)    1,253   (232%)
discontinued
operations, net
of tax
Income tax           (565)      (114)    396%       (254)      (152)   67%
provision
Income (loss)
from continuing      (1,356)    4,692    (129%)     (1,902)    1,101   (273%)
operations
Discontinued
operations, net      (823)      (1,045)  (21%)      (180)      (442)   (59%)
of tax
Net income (loss)  $ (2,179)  $ 3,647    (160%)   $ (2,082)  $ 659     (416%)
Basic weighted
average shares       10,585     10,570              10,590     10,575
outstanding
Basic and diluted
earnings (loss)
per share:
 Income (loss)
from continuing    $ (0.13)   $ 0.44              $ (0.18)   $ 0.10
operations
 Discontinued
operations, net      (0.08)     (0.10)              (0.02)     (0.04)
of tax
 Net income       $ (0.21)   $ 0.34              $ (0.20)   $ 0.06
(loss)



PMC Commercial Trust and Subsidiaries
Quarterly Operating Results
                        Three Months Ended
                        Dec. 31,  Sept. 30,  June 30,  March 31,  Dec. 31,
                        2012        2012       2012      2012       2011
                        (In thousands)
Revenues:
 Interest income       $  3,504    $  3,561   $  3,433  $  3,398   $   3,473
 Premium income           702         796        278       113         649
 Other income             244         507        253       276         242
Total revenues             4,450       4,864      3,964     3,787       4,364
Expenses:
 Interest                 892         887        876       883         822
 Salaries and related     923         1,091      1,115     1,144       1,066
benefits
 General and              634         495        538       460         408
administrative
 Strategic                247         1,421      1,352     850         717
alternatives
 Severance and related    2,114       -          -         -           -
benefits
 Provision for loan       1,288       53         118       475         98
losses, net
Total expenses             6,098       3,947      3,999     3,812       3,111
Income (loss) before
income tax benefit
(provision) and            (1,648)     917        (35)      (25)        1,253
discontinued
operations, net of tax
Income tax benefit         (254)       (272)      (58)      19          (152)
(provision)
Income (loss) from         (1,902)     645        (93)      (6)         1,101
continuing operations
Discontinued               (180)       (172)      (322)     (149)       (442)
operations, net of tax
Net income (loss)       $  (2,082)  $  473     $  (415)  $  (155)   $   659



Real Estate Investment Trust ("REIT") Taxable Income (Loss)

REIT taxable income (loss) 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 in
determining the level of dividends to be paid to our shareholders.

The following reconciles net income (loss) to REIT taxable income (loss):

                                                           Three Months Ended
                            Years Ended December 31,       December 31,
                            2012       2011      2010      2012       2011
                              (In thousands)
Net income (loss)           $ (2,179)  $ 3,647   $ 4,297   $ (2,082)  $ 659
 Book/tax differences:
 Gains related to real     -          (235)     387       -          -
estate
 Strategic alternatives    (678)      678       -         (4,134)    678
 Severance accrual         1,777      (100)     (33)      1,800      (35)
(payments)
 Impairment losses         300        804       317       133        200
 Amortization and          (188)      (68)      (102)     (9)        (18)
accretion
 Loan valuation            1,403      184       (241)     1,004      160
 Other, net                157        8         (174)     (41)       (7)
                              592        4,918     4,451     (3,329)    1,637
Adjustment for TRS net loss   (840)      (131)     340       (250)      (271)
(income), net of tax
Dividend distribution from    -          1,000     300       -          1,000
TRS
REIT taxable income (loss)  $ (248)    $ 5,787   $ 5,091   $ (3,579)  $ 2,366
Distributions declared      $ 6,353    $ 6,767   $ 6,757   $ 1,270    $ 1,692
Basic weighted average        10,585     10,570    10,554    10,590     10,575
common shares outstanding



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

Website: http://www.pmctrust.com
Contact: Investor Relations, +1-972-349-3235
 
Press spacebar to pause and continue. Press esc to stop.