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PMC Commercial Trust Announces Second Quarter and Year-to-Date Results
Posted by: gurufocus (IP Logged)
Date: August 7, 2009 08:21AM

Press Release: PMC Commercial Trust Announces Second Quarter and Year-to-Date Results

DALLAS, Aug. 7 /PRNewswire-FirstCall/ -- PMC Commercial Trust (NYSE Amex: PCC) announced second quarter and year-to-date results today.

Second Quarter Results

Income from continuing operations decreased to $1,544,000 ($0.15 per share) during the three months ended June 30, 2009 from $3,105,000 ($0.29 per share) during the three months ended June 30, 2008. Significant changes when comparing the periods included:

  • a decrease in interest income of $734,000 and interest expense of $187,000 due primarily to decreases in variable interest rates;
  • a decrease in income from retained interests in transferred assets ("Retained Interests") of $1,496,000 primarily due to a reduction in our weighted average Retained Interests and prepayment fees; and
  • a reduction in overhead (salaries and related benefits and general and administrative expenses) of $473,000 due primarily to our 2008 cost reduction initiatives.

For the three months ended June 30, 2009, net income decreased to $1,564,000, or $0.15 per share, compared to $3,529,000, or $0.33 per share, for the three months ended June 30, 2008. In addition to the changes described above, discontinued operations during the quarter ended June 30, 2008 included net gains on sales of real estate of $424,000.

Year-to-Date Results

Income from continuing operations decreased to $3,140,000 ($0.30 per share) during the six months ended June 30, 2009 from $6,150,000 ($0.57 per share) during the six months ended June 30, 2008. Significant changes when comparing the periods included:

  • a decrease in interest income of $1,649,000 and interest expense of $614,000 due primarily to decreases in variable interest rates;
  • a decrease in income from Retained Interests of $2,499,000 due primarily to a reduction in our weighted average Retained Interests and prepayment fees;
  • a decrease in other income of $625,000 due primarily to decreased prepayment fees; and
  • a reduction in overhead (salaries and related benefits and general and administrative expenses) of $817,000 due primarily to our 2008 cost reduction initiatives.

For the six months ended June 30, 2009, net income decreased to $3,190,000, or $0.30 per share, compared to $6,912,000, or $0.64 per share, for the six months ended June 30, 2008. In addition to the changes described above, discontinued operations during the six months ended June 30, 2008 included net gains on sales of real estate of $762,000.

Interest Rate Sensitivity

  • Approximately 72% of our retained loans at June 30, 2009 were based on LIBOR or the prime rate.
  • We have $116.3 million of loans based on LIBOR and $27.1 million of debt based on LIBOR. On the net difference of $89.2 million, reductions in LIBOR will have a negative impact on future earnings. Effective July 1, 2009, we experienced a reduction in the LIBOR base rate charged on our loans (a decrease of 60 basis points) which will cause a reduction in our net interest income, assuming no change in our LIBOR based loans or debt, of approximately $535,000 on an annual basis.

Financial Position

  • Total assets were relatively unchanged at $225.4 million at June 30, 2009 compared to $227.5 million at December 31, 2008 and $236.9 million at June 30, 2008.
  • Total serviced loan portfolio was $270.3 million at June 30, 2009 down from $275.5 million at December 31, 2008 and down from $298.4 million as of June 30, 2008.
  • Outstanding retained loan portfolio was $185.5 million at June 30, 2009 compared to $180.6 million at December 31, 2008 and $193.5 million as of June 30, 2008.
  • In accordance with generally accepted accounting principles, commencing in January 2009, we consolidated one of our special purpose entities. As a result, at June 30, 2009, approximately $11.3 million of loans previously included within our securitized portfolio are now included in our retained portfolio.

Originations

  • During the first half of 2009, we originated $7.8 million of loans.
  • We anticipate that 2009 aggregate loan originations will be between $20 million to $30 million.

Liquidity

  • Our $45 million revolving credit facility, which matures December 31, 2009, had $23.8 million outstanding at June 30, 2009. We are currently negotiating to extend the maturity on our revolving credit facility to December 31, 2010; however, we anticipate that the aggregate availability under our revolving credit facility will be reduced and its costs will increase.

Dividends

  • A regular quarterly dividend on our common shares of $0.225 per share was paid on April 13, 2009 to shareholders of record on March 31, 2009.
  • A regular quarterly dividend on our common shares of $0.16 per share was paid on July 13, 2009 to shareholders of record on June 30, 2009.

Lance B. Rosemore, Chairman of the Board, stated, "We have positioned our company to operate profitably in the troubled economic environment. We have taken the necessary steps to reduce overhead and have maintained a conservative debt-to-equity ratio. As always, we will continue with our proven disciplined approach to lending which produced a relatively stable portfolio in a turbulent environment. Our loan losses have continued to be minimal.

\'Our strategy has been to focus almost exclusively on marketing SBA 7(a) loans until the liquidity markets improve and are able to restart our other lending programs. We estimate that our redirected efforts will result in originations in excess of $20 million of SBA 7(a) loans this year compared to $11 million in 2008.

\'Since approximately 72% of our loan portfolio is floating rate, our earnings for the quarter were significantly impacted by the historically low LIBOR rate environment. To the extent that LIBOR remains at these low levels, our future earnings will continue to be impacted."

The following tables contain comparative selected financial data:

FINANCIAL POSITION INFORMATION
         (In thousands, except per share information)

                                         June 30,   December 31,   June 30,
                                           2009        2008          2008
                                         --------    ---------     --------
    Loans receivable, net               $184,415     $179,807      $193,004
    Retained interests in transferred
     assets                              $25,399      $33,248       $33,463
    Total assets                        $225,443     $227,524      $236,854
    Debt                                 $66,245      $61,814       $68,862
    Total beneficiaries\' equity         $152,649     $154,362      $158,737
    Shares outstanding                    10,548       10,695        10,782
    Net asset value per share             $14.47       $14.43        $14.72
RESULTS OF OPERATIONS
    (Dollars in thousands, except per share information)


                      Six Months Ended June 30,   Three Months Ended June 30,
                     --------------------------  -----------------------------
                       2009     2008     Dec %      2009     2008   Inc (Dec)%
                       ----     ----     -----      ----     ----   ----------
    Income:
    Interest income  $5,636    $7,285    (23%)    $2,785    $3,519     (21%)
    Income from
     retained
     interests in
     transferred
     assets           1,697     4,196    (60%)       781     2,277     (66%)
    Other income        530     1,155    (54%)       306       418     (27%)
                     ------    ------  ------     ------    ------   ------
       Total income   7,863    12,636    (38%)     3,872     6,214     (38%)
                     ------    ------  ------     ------    ------   ------

    Expenses:
    Interest          1,596     2,210    (28%)       790       977     (19%)
    Salaries and
     Related
     benefits         1,920     2,591    (26%)       999     1,352     (26%)
    General and
     administrative     977     1,123    (13%)       534       654     (18%)
    Impairments and
     provisions         280       389    (28%)        73        35     109%
                     ------    ------  ------     ------    ------   ------
       Total
        expenses      4,773     6,313    (24%)     2,396     3,018     (21%)
                     ------    ------  ------     ------    ------   ------

    Income before
     income tax benefit
     (provision) and
     discontinued
     operations       3,090     6,323    (51%)     1,476     3,196     (54%)

    Income tax
     benefit
     (provision)         50     (173)   (129%)        68      (91)    (175%)
                     ------   ------   ------     ------   ------    ------

    Income from
     continuing
     operations       3,140     6,150    (49%)     1,544     3,105     (50%)

    Discontinued
     operations          50       762    (93%)        20       424     (95%)
                     ------    ------  ------     ------    ------   ------

    Net income       $3,190    $6,912    (54%)    $1,564    $3,529     (56%)
                     ======    ======  ======     ======    ======   ======

    Basic weighted
     average shares
     outstanding     10,599    10,766             10,548    10,767
                     ======    ======             ======    ======

    Basic and diluted
     earnings per share:
      Income from
       continuing
       operations     $0.30     $0.57              $0.15     $0.29
      Discontinued
       operations         -      0.07                  -      0.04
                     ------    ------             ------    ------
      Net income      $0.30     $0.64              $0.15     $0.33
                     ======    ======             ======    ======

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 (loss):

Six Months Ended     Three Months Ended
                                         June 30,             June 30,
                                  --------------------  --------------------
                                     2009        2008     2009         2008
                                     ----        ----     ----         ----
                                                  (In thousands)

    Net income                     $3,190      $6,912    $1,564      $3,529
        Book/tax difference
         on depreciation              (28)        (30)      (14)        (15)
        Book/tax difference on
         deferred gains from
         property sales               (50)       (762)      (20)       (424)
        Book/tax difference on
         Retained Interests, net     (411)        148      (238)       (204)
        Severance payments         (1,429)          -    (1,407)          -
        Dividend distribution
         from taxable REIT
         subsidiary                     -       2,000         -       2,000
        Book/tax difference on
         amortization and
         accretion                    (63)       (140)      (31)        (93)
        Asset valuation               154          16        62         (54)
        Other book/tax
         differences, net             (58)         45       (74)        (23)
                                   ------      ------    ------      ------
        Subtotal                    1,305       8,189      (158)      4,716

    Less:  taxable REIT
     subsidiaries net income
     (loss), net of tax               140        (278)      154        (146)
                                   ------      ------    ------      ------
    REIT taxable income (loss)     $1,445      $7,911       $(4)     $4,570
                                   ======      ======    ======      ======

    Distributions declared         $4,069      $4,579    $1,687      $2,426
                                   ======      ======    ======      ======

    Weighted average common
     shares outstanding            10,599      10,766    10,548      10,767
                                   ======      ======    ======      ======

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 (loss):

Source: PRNewsWire



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