UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 6, 2008
PMC COMMERCIAL TRUST
(Exact name of registrant as specified in its charter)
| TEXAS | 1-13610 | 75-6446078 | ||
| (State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 17950 Preston Road, Suite 600, Dallas, TX | 75252 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (972) 349-3200
| NONE |
| (Former name or former address if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On November 6, 2008, PMC Commercial Trust issued a press release describing, among other things, its results of operations for the three and nine months ended September 30, 2008. A copy of the press release is attached as Exhibit 99.1 to this report. This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
Exhibits:
99.1 Press Release dated November 6, 2008.
SIGNATURE
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: November 7, 2008
| PMC COMMERCIAL TRUST | ||
| By: | /s/ Barry N. Berlin | |
| Barry N. Berlin, Chief Financial Officer | ||
EXHIBIT INDEX
| Exhibit Number |
Description | |
| 99.1 | Press Release dated November 6, 2008. |
Exhibit 99.1
FOR IMMEDIATE PRESS RELEASE
FOR:
|
PMC Commercial Trust | CONTACT: | Investor Relations | |||
| 17950 Preston Road, Suite 600 | 972-349-3235 | |||||
| Dallas, TX 75252 | www.pmctrust.com |
PMC Commercial Trust Announces Third Quarter and Year-to-Date Results
PMC Commercial Trust
NYSE ALTERNEXT US (Symbol PCC)
www.pmctrust.com
NYSE ALTERNEXT US (Symbol PCC)
www.pmctrust.com
| Dallas, TX | November 6, 2008 |
PMC Commercial Trust (NYSE ALTERNEXT US: PCC) announced third quarter and year-to-date results
today.
Third Quarter Results
Income from continuing operations decreased to $587,000 ($0.06 per share) during the three months
ended September 30, 2008 from $3,542,000 ($0.33 per share) during the three months ended September
30, 2007. For the three months ended September 30, 2008, net income decreased to $603,000, or
$0.06 per share, compared to $3,497,000, or $0.33 per share, for the three months ended September
30, 2007. In October 2008, as a result of current economic conditions, we announced a cost
reduction plan. These initiatives included streamlining our sales, credit and servicing, as well
as outsourcing some functions. The plan resulted in severance related charges of $1,573,000 during
the third quarter of 2008. Without this one-time charge, our income from continuing operations
would have been $2,160,000 during the three months ended September 30, 2008 and our net income
would have been $2,176,000. Management estimates annual savings for these initiatives to be
approximately $1.0 million to $1.2 million.
Other significant items when comparing the periods included:
| • | a decrease in income from retained interests in transferred assets of $1,629,000
primarily due to a decrease in unanticipated prepayment fees of $908,000 and a decrease in
our weighted average retained interests in transferred assets; |
||
| • | a decrease in interest income of $554,000 and interest expense of $416,000 due primarily
to decreases in variable interest rates; and |
||
| • | a decrease in other income of $228,000 due primarily to decreased other loan related
income. |
Year-to-Date Results
Income from continuing operations decreased to $6,737,000 ($0.63 per share) during the nine months
ended September 30, 2008 from $9,927,000 ($0.93 per share) during the nine months ended September
30, 2007. For the nine months ended September 30, 2008, net income decreased to $7,515,000, or
$0.70 per share, compared to $10,487,000, or $0.98 per share, for the nine months ended September
30, 2007. Without the one-time severance related charges of $1,573,000, our income from continuing
operations would have been $8,310,000 during the nine months ended September 30, 2008 and our net
income would have been $9,088,000.
Other significant items when comparing the periods included:
| • | a decrease in income from retained interests in transferred assets of $1,411,000
primarily due to a decrease in the weighted average balance outstanding of our retained
interests in transferred assets; |
||
| • | a decrease in interest income of $1,523,000 and interest expense of $996,000 due
primarily to decreases in variable interest rates; and |
||
| • | a decrease in other income of $454,000 due primarily to decreased prepayment fee income
on our loans receivable, other loan related income and servicing fee income. |
| PMC COMMERCIAL TRUST | Earnings Press Release | November 6, 2008 |
Financial Position
| • | Total assets were approximately $228.3 million at September 30, 2008 compared to
approximately $231.4 million at December 31, 2007 and approximately $233.8 million at
September 30, 2007. This represents a decrease of $3.1 million, or 1.3% from December 31,
2007, and a decrease of $5.5 million, or 2.4% from September 30, 2007. |
| • | Total serviced loan portfolio was approximately $287.3 million at September 30, 2008
compared to approximately $326.4 million at December 31, 2007 and approximately $340.8 million
as of September 30, 2007. This represents a decrease of $39.1 million, or 12.0% from December
31, 2007, and a decrease of $53.5 million, or 15.7% from September 30, 2007. |
| • | Outstanding retained loan portfolio was approximately $186.7 million at September 30, 2008
compared to approximately $166.4 million at December 31, 2007 and approximately $164.5 million
as of September 30, 2007. This represents an increase of $20.3 million, or 12.2% from
December 31, 2007, and an increase of $22.2 million, or 13.5% from September 30, 2007. |
| • | The structured notes payable of two qualified special purpose entities were repaid during
2008. As a result, approximately $21.4 million of loans previously included within our
securitized portfolio were included in our retained portfolio. |
Interest Rate Sensitivity
| • | Approximately 78% of our loans receivable at September 30, 2008 were based on LIBOR or the
prime rate. |
| • | The average 90-day LIBOR, on which we base the interest rate we charge to our LIBOR based
borrowers, decreased from 5.36% during the nine months ended September 30, 2007 to 3.41%
during the nine months ended September 30, 2008. The LIBOR base rate was 3.88% commencing
October 1, 2008. |
| • | The average prime rate, on which we base the interest rate we charge to our prime rate
borrowers, decreased from 8.25% during the nine months ended September 30, 2007 to 5.83%
during the nine months ended September 30, 2008. The prime rate base rate was 5.00%
commencing October 1, 2008. |
Originations and Prepayments
| • | During the first nine months of 2008, we funded approximately $30.6 million of loans. |
| • | We anticipate that 2008 aggregate loan fundings for the fourth quarter of 2008 will be
approximately $5 million to $10 million. |
| • | We anticipate that 2009 aggregate loan funding will range between $20 million to $25
million. |
| • | Principal prepayments on our retained portfolio were $19.1 million during the first nine
months of 2008 compared to $23.1 million during the first nine months of 2007. |
| • | Prepayments of our serviced portfolio were $55.7 million during the first nine months of
2008 compared to $67.7 million during the first nine months of 2007. |
Liquidity
| • | We are currently focusing on originating SBA 7(a) loans since the government guaranteed
portion (approximately 75% to 85%) can be more easily leveraged in an active secondary market. |
| • | Our $45 million revolving credit facility, which matures December 31, 2009, had $21.5
million outstanding at September 30, 2008. |
Dividends
| • | A regular quarterly dividend on our common shares of beneficial interest of $0.225 per
share was paid on October 14, 2008 to shareholders of record on September 30, 2008. |
| • | We anticipate a continuation of the $0.225 per share quarterly dividend for the fourth
quarter of 2008. A special dividend may be declared at year-end, if deemed appropriate. |
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| PMC COMMERCIAL TRUST | Earnings Press Release | November 6, 2008 |
Lance B. Rosemore, Chairman of the Board of Trust Managers, stated, “We have remained profitable
through this economic downturn and challenging liquidity market. We are confident that our cost
cutting initiatives will strengthen profitability by reducing operating costs and better position
the company to take advantage of market conditions as and when they stabilize. Consequently, our
Board feels confident that the current level of dividends will be maintained for the next year.
‘Due to the economic turmoil facing all financial services companies, we have been and for the near
term will be, focusing on SBA 7(a) lending. Our actions have resulted in an increase in both SBA
7(a) commitments and funding. Until we see an increased ability to obtain leverage or our
prepayments provide additional liquidity, we will continue originating primarily SBA 7(a) loans.”
The following tables contain comparative selected financial data:
FINANCIAL POSITION INFORMATION
(In thousands)
(In thousands)
| September 30, | December 31, | September 30, | ||||||||||
| 2008 | 2007 | 2007 | ||||||||||
Loans receivable, net |
$ | 186,190 | $ | 165,969 | $ | 164,064 | ||||||
Retained interests in transferred assets |
$ | 33,384 | $ | 48,616 | $ | 50,611 | ||||||
Total assets |
$ | 228,314 | $ | 231,420 | $ | 233,784 | ||||||
Debt |
$ | 60,585 | $ | 62,953 | $ | 63,420 | ||||||
Total beneficiaries’ equity |
$ | 155,893 | $ | 156,354 | $ | 157,487 | ||||||
Shares outstanding |
10,782 | 10,765 | 10,765 | |||||||||
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| PMC COMMERCIAL TRUST | Earnings Press Release | November 6, 2008 |
RESULTS OF OPERATIONS
COMPARED TO PRIOR YEARS
(Dollars in thousands, except per share information)
COMPARED TO PRIOR YEARS
(Dollars in thousands, except per share information)
| Nine Months Ended September 30, | Three Months Ended September 30, | |||||||||||||||||||||||
| 2008 | 2007 | Inc (Dec) % | 2008 | 2007 | Inc (Dec) % | |||||||||||||||||||
Income: |
||||||||||||||||||||||||
Interest income |
$ | 10,886 | $ | 12,409 | (12 | %) | $ | 3,601 | $ | 4,155 | (13 | %) | ||||||||||||
Income from retained interests in transferred assets |
5,243 | 6,654 | (21 | %) | 1,047 | 2,676 | (61 | %) | ||||||||||||||||
Other income |
1,587 | 2,041 | (22 | %) | 432 | 660 | (35 | %) | ||||||||||||||||
Total income |
17,716 | 21,104 | (16 | %) | 5,080 | 7,491 | (32 | %) | ||||||||||||||||
Expenses: |
||||||||||||||||||||||||
Interest |
3,095 | 4,091 | (24 | %) | 930 | 1,346 | (31 | %) | ||||||||||||||||
Salaries and related benefits |
3,752 | 3,574 | 5 | % | 1,161 | 1,193 | (3 | %) | ||||||||||||||||
General and administrative |
1,794 | 1,879 | (5 | %) | 671 | 583 | 15 | % | ||||||||||||||||
Severance and related benefits |
1,573 | — | — | 1,573 | — | — | ||||||||||||||||||
Impairments and provisions |
491 | 1,105 | (56 | %) | 102 | 691 | (85 | %) | ||||||||||||||||
Total expenses |
10,705 | 10,649 | 1 | % | 4,437 | 3,813 | 16 | % | ||||||||||||||||
Income before income tax provision, minority interest,
and discontinued operations |
7,011 | 10,455 | (33 | %) | 643 | 3,678 | (83 | %) | ||||||||||||||||
Income tax provision |
(206 | ) | (461 | ) | (55 | %) | (33 | ) | (114 | ) | (71 | %) | ||||||||||||
Minority interest (preferred stock dividend of
subsidiary) |
(68 | ) | (67 | ) | 1 | % | (23 | ) | (22 | ) | 5 | % | ||||||||||||
Income from continuing operations |
6,737 | 9,927 | (32 | %) | 587 | 3,542 | (83 | %) | ||||||||||||||||
Discontinued operations |
778 | 560 | 39 | % | 16 | (45 | ) | (136 | %) | |||||||||||||||
Net income |
$ | 7,515 | $ | 10,487 | (28 | %) | $ | 603 | $ | 3,497 | (83 | %) | ||||||||||||
Basic weighted average shares outstanding |
10,771 | 10,758 | 10,782 | 10,765 | ||||||||||||||||||||
Basic and diluted earnings per share: |
||||||||||||||||||||||||
Income from continuing operations |
$ | 0.63 | $ | 0.93 | $ | 0.06 | $ | 0.33 | ||||||||||||||||
Discontinued operations |
0.07 | 0.05 | — | — | ||||||||||||||||||||
Net income |
$ | 0.70 | $ | 0.98 | $ | 0.06 | $ | 0.33 | ||||||||||||||||
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| PMC COMMERCIAL TRUST | Earnings Press Release | November 6, 2008 |
RESULTS OF OPERATIONS
COMPARED TO PRIOR QUARTERS
(Dollars in thousands, except per share information)
COMPARED TO PRIOR QUARTERS
(Dollars in thousands, except per share information)
| Quarter Ended | ||||||||||||
| September 30, | June 30, | |||||||||||
| 2008 | 2008 | Inc (Dec) % | ||||||||||
Income: |
||||||||||||
Interest income |
$ | 3,601 | $ | 3,519 | 2 | % | ||||||
Income from retained interests in transferred assets |
1,047 | 2,277 | (54 | %) | ||||||||
Other income |
432 | 418 | 3 | % | ||||||||
Total income |
5,080 | 6,214 | (18 | %) | ||||||||
Expenses: |
||||||||||||
Interest |
930 | 954 | (3 | %) | ||||||||
Salaries and related benefits |
1,161 | 1,352 | (14 | %) | ||||||||
General and administrative |
671 | 654 | 3 | % | ||||||||
Severance and related benefits |
1,573 | — | — | |||||||||
Impairments and provisions |
102 | 35 | 191 | % | ||||||||
Total expenses |
4,437 | 2,995 | 48 | % | ||||||||
Income before income tax provision, minority interest,
and discontinued operations |
643 | 3,219 | (80 | %) | ||||||||
Income tax provision |
(33 | ) | (91 | ) | (64 | %) | ||||||
Minority interest (preferred stock dividend of subsidiary) |
(23 | ) | (23 | ) | — | |||||||
Income from continuing operations |
587 | 3,105 | (81 | %) | ||||||||
Discontinued operations |
16 | 424 | (96 | %) | ||||||||
Net income |
$ | 603 | $ | 3,529 | (83 | %) | ||||||
Basic weighted average shares outstanding |
10,782 | 10,767 | ||||||||||
Basic and diluted earnings per share: |
||||||||||||
Income from continuing operations |
$ | 0.06 | $ | 0.29 | ||||||||
Discontinued operations |
— | 0.04 | ||||||||||
Net income |
$ | 0.06 | $ | 0.33 | ||||||||
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| PMC COMMERCIAL TRUST | Earnings Press Release | November 6, 2008 |
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:
| Nine Months Ended | Three Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| (In thousands) | ||||||||||||||||
Net income |
$ | 7,515 | $ | 10,487 | $ | 603 | $ | 3,497 | ||||||||
Book/tax difference on depreciation |
(45 | ) | (49 | ) | (15 | ) | (24 | ) | ||||||||
Book/tax difference on property sales |
(778 | ) | 680 | (16 | ) | (13 | ) | |||||||||
Book/tax difference on Retained Interests, net |
(3 | ) | 1,243 | (151 | ) | 675 | ||||||||||
Severance accrual |
1,573 | — | 1,573 | — | ||||||||||||
Impairment losses |
— | 233 | — | — | ||||||||||||
Dividend distribution from taxable REIT subsidiary |
2,000 | — | — | — | ||||||||||||
Book/tax difference on rent and related receivables |
— | (1,152 | ) | — | — | |||||||||||
Book/tax difference on amortization and accretion |
(172 | ) | (192 | ) | (32 | ) | (46 | ) | ||||||||
Asset valuation |
106 | (295 | ) | 90 | 6 | |||||||||||
Other book/tax differences, net |
(30 | ) | 101 | (75 | ) | (73 | ) | |||||||||
| 10,166 | 11,056 | 1,977 | 4,022 | |||||||||||||
Less: taxable REIT subsidiaries net income, net of tax |
(392 | ) | (796 | ) | (114 | ) | (231 | ) | ||||||||
REIT taxable income |
$ | 9,774 | $ | 10,260 | $ | 1,863 | $ | 3,791 | ||||||||
Distributions declared |
$ | 7,004 | $ | 9,685 | $ | 2,425 | $ | 3,229 | ||||||||
Common shares outstanding |
10,771 | 10,758 | 10,782 | 10,765 | ||||||||||||
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. 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 SUBSEQUENT EVENTS OR CIRCUMSTANCES.
6