Rising earnings estimates on the back of strong second-quarter
results - including a 21.4% earnings surprise - helped
Pacific Continental Corp.
) achieve a Zacks #1 Rank (Strong Buy) on September 22. Moreover,
this commercial and retail banking service provider has delivered
positive earnings surprises in the last five consecutive quarters
with an average beat of 20.2%.
With a solid return of 35.6% in a year's time and a history of
beating quarterly earnings estimates, this stock offers an
attractive investment opportunity.
The Rank Driver
Better-than-expected second-quarter earnings, steady loan growth
and fundamental strength - including strong credit quality and
capital ratios, are the primary rank drivers for this stock.
Pacific Continental reported its second-quarter results on July 18
with earnings per share of 17 cents, beating the Zacks Consensus
Estimate of 14 cents by 21.4% and year-ago earnings of 12 cents by
41.7%. Strong results for the quarter were primarily aided by lower
non-interest expenses and reduced provision for loan losses.
However, a decline in non-interest income was the downside for the
Net interest income remained almost flat at $12.5 million. However,
non-interest income declined 10.3% year over year to $1.5 million.
The decline was primarily due to absence of gains on the sale of
securities that occurred during the second quarter 2011.
Non-interest expense decreased 2.8% from the year-ago period to
$8.8 million. Provision for loan losses decreased 70% from the
year-ago quarter to $0.6 million.
Credit quality continued to improve. Nonperforming assets were
2.30% of total assets, down 230 basis points (bps) from 4.60% as of
June 30, 2011. Net charge-offs came in at $0.3 million compared
with $1.9 million in the year-ago quarter.
As of June 30, 2012, Pacific Continental's total risk-based capital
ratio was 18.99%, Tier 1 risk-based capital ratio was 17.73% and
Tier 1 leverage ratio was 12.70%. Tangible book value per share
came in at $8.77 against $8.41 in the year-ago quarter.
Earnings Estimate Revisions
The Zacks Consensus Estimate for 2012 increased 3.2% to 64 cents
per share over the last 60 days. The current estimate implies
year-over-year growth of 120.0%.
For 2013, over the same time frame, the Zacks Consensus Estimate
increased by 4.8% to 66 cents per share.
Pacific Continental currently trades at a forward P/E of 14.2x, a
13.4% discount to the peer group average of 16.4x. Also, on a
price-to-book basis, the shares are trading at 0.9x, an 18.2%
discount to the peer group average of 1.1x.
The company has a trailing 12-month ROE of 4.2% compared with the
peer group average of 6.1%.
About the Company
Headquartered in Eugene, Oregon, Pacific Continental Corporation is
a bank holding company. It operates 14 commercial banking offices
in Oregon and Washington and a loan production office in Tacoma,
Washington through its subsidiary - Pacific Continental Bank -
which offers a wide range of consumer and business banking deposit
products and services. The company has a market capitalization of
roughly $163.1 million.
Other Zacks #1 Rank bank stocks include
BofI Holding Inc.
Hanmi Financial Corporation
BOFI HLDG INC (BOFI): Free Stock Analysis
HANMI FINL CP (HAFC): Free Stock Analysis
PACIFIC CONTL (PCBK): Free Stock Analysis
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