COBH Pennsylvania Commerce Bancorp (MM)

Pennsylvania Commerce Bancorp, Inc. (NASDAQ Global Select Market Symbol:COBH), parent company of Commerce Bank/Harrisburg, N.A., reported record loans, revenues, net income and earnings per share for the second quarter of 2008, announced Gary L. Nalbandian, Chairman. � Second Quarter 2008 Financial Highlights � � � � � % 06/30/08 06/30/07 Change Total assets $ 2.05 Billion $ 1.92 Billion 7 % � Total deposits $ 1.55 Billion $ 1.53 Billion 1 % � Total loans (net) $ 1.30 Billion $ 1.07 Billion 21 % � � � � � � � � � � � � � � Total revenues $ 25.6 Million $ 20.0 Million 28 % � Net income $ 3.5 Million $ 1.6 Million 123 % � Diluted net income per share $ 0.54 $ 0.24 125 % � Chairman�s Statement In commenting on the Company�s financial results, Chairman Nalbandian noted the following highlights: Net income was $3.5 million for the second quarter, up $1.9 million, or 123%, over the second quarter one year ago. Net income for the first six months of 2008 totaled $6.7 million, up $4.0 million, or 150%, over the first half of 2007. Diluted net income per share was $0.54 for the quarter, up $0.30, or 125%, over the second quarter of 2007. Diluted net income per share for the first six months of 2008 was $1.03, up $0.62, or 151%, over the same period last year. Total revenues grew $5.6 million, or 28%, for the second quarter of 2008 over the second quarter one year ago. Net interest income for the quarter increased $4.8 million, or 34%, over the same period in 2007. The Company�s net interest margin for the second quarter improved 91 basis points over the same quarter one year ago to 4.10%. Deposit charges and service fees grew 23% for the second quarter over the same period one year ago. Stockholders� equity increased $7.7 million, or 7%, to $112.4 million compared to June 30, 2007. Return on average stockholders� equity improved to 12.57% for the quarter vs. 6.00% for the second quarter of 2007. Total assets reached $2.0 billion, up 7% over the past twelve months. Net loans grew $228 million, or 21%, over the second quarter one year ago. The Company recently announced that its common stock has been added to the Russell 3000 Index. The Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based upon total market capitalization, which represents 98 percent of the investable U.S. equity market. Income Statement � � Three months ended June 30, Six months ended June 30, (dollars in thousands, except per share data) � 2008 � 2007 � %Change � 2008 � 2007 � %Change Total revenues $ 25,580 � $ 19,959 � 28 % $ 50,156 � $ 38,357 � 31 % Total operating expenses 19,077 17,308 10 % 37,978 33,798 12 % Net income 3,506 1,571 123 % 6,712 2,683 150 % Diluted net income per share � $ 0.54 � $ 0.24 � 125 % � $ 1.03 � $ 0.41 � 151 % � Total revenues (net interest income plus non-interest income) for the second quarter increased $5.6 million to $25.6 million, up 28% over the second quarter of 2007. Total revenues for the first six months of 2008 increased by $11.8 million, or 31%, over the same period in 2007. Net income totaled $3.5 million for the second quarter of 2008, a $1.9 million increase over net income of $1.6 million for the second quarter of 2007. Net income per fully diluted share for the second quarter of 2008 was $0.54, a 125% increase over the $0.24 recorded for the same period a year ago. Net income for the first six months of 2008 grew $4.0 million, or 150%, over the first half of 2007. Net income per fully diluted share totaled $1.03 for the first half of 2008, up $0.62, or 151%, over the same period last year. Net Interest Income and Net Interest Margin Net interest income for the second quarter of 2008 totaled $19.1 million, an increase of $4.8 million, or 34%, over the $14.3 million recorded a year ago. This increase was a result of continued strong loan growth combined with significant improvement in the Company�s net interest margin. For the first six months of 2008, net interest income totaled $37.7 million, up $10.2 million, or 37%, over the $27.5 million recorded the first half of 2007. The net interest margin for the second quarter of 2008 was 4.10%, up 3 basis points on a linked-quarter basis and up 91 basis points over the 3.19% figure recorded in the second quarter of 2007. The improvement in net interest margin is the result of continued strong loan growth combined with a marked reduction in the Company�s deposit and total cost of funds. Net interest income, on a tax equivalent basis, totaled $19.5 million in the second quarter of 2008, an increase of $5.0 million, or 34%, over the second quarter one year ago. Net interest margin on a fully-taxable equivalent basis was 4.20%. Fully taxable net interest income for the first six months of 2008 was $38.5 million, up $10.5 million, or 37%, as compared to the same period one year ago. Year-to-date net interest margin on a fully taxable basis was 4.17%, up 100 basis points over the first six months of 2007. Net Interest Income and Rate/Volume Analysis As shown below, the increase in net interest income on a tax equivalent basis was due to volume increases in the Company�s earning assets, as well as noticeable improvement in the net interest margin. � (dollars in thousands) � Net Interest Income June 302008 vs. 2007 � VolumeIncrease � RateChange � TotalIncrease � %Increase Quarter $ 1,316 � $ 3,654 � $ 4,970 � 34 % Six Months � � 3,008 � � 7,454 � � 10,462 � 37 % � Noninterest Income Noninterest income for the second quarter of 2008 totaled $6.5 million, up $788,000, or 14%, over $5.7 million a year ago. The growth in noninterest income for the quarter was reflected in increased deposit charges and service fees as depicted below: � � Three months ended June 30, Six months ended June 30, (dollars in thousands) � 2008 � 2007 � %Change � 2008 � 2007 � %Change Deposit charges and service fees $ 6,243 $ 5,073 � 23 � % $ 11,919 $ 9,575 � 24 % Other income � � 407 � � 632 � (36 ) � � � 724 � � 1,129 � (36 ) � Subtotal 6,650 5,705 17 12,643 10,704 18 Net investment securities gains (losses) � � (157 ) � - � � � � � � (157 ) � 171 � � � � Total noninterest income � $ 6,493 � $ 5,705 � 14 � % � $ 12,486 � $ 10,875 � 15 � % � Noninterest Expenses Noninterest expenses for the second quarter of 2008 were $19.1 million, up 10%, over $17.3 million one year ago. The increases in noninterest expenses for the quarter were widespread across several categories, as shown in the following table: � � Three months ended June 30, � Six months ended June 30, (dollars in thousands) � 2008 � 2007 � %Change � 2008 � 2007 � %Change Salaries and employee benefits $ 9,342 � $ 8,554 � 9 % $ 18,223 � $ 16,952 � 7 % Occupancy 1,996 1,771 13 4,070 3,606 13 Furniture and equipment 1,134 992 14 2,186 1,947 12 Advertising and marketing 826 735 12 1,663 1,521 9 Data Processing 1,829 1,657 10 3,534 3,132 13 Postage and supplies 469 469 0 1,001 1,008 (1 ) Regulatory assessments and costs 601 707 (15 ) 1,739 894 95 Telephone 585 574 2 1,181 1,138 4 Other expenses � � 2,295 � � 1,849 � 24 � � � � 4,381 � � 3,600 � 22 � � Total noninterest expenses � $ 19,077 � $ 17,308 � 10 � % � $ 37,978 � $ 33,798 � 12 � % � Noninterest expenses for the first six months of 2008 totaled $38.0 million, up $4.2 million, or 12%, over the $33.8 million recorded during the same period in 2007. Increases in noninterest expenses for both the quarter and six months ended June 30, 2008 include costs associated with three stores that were opened during the second half of 2007. Therefore, these costs are not included for the quarter and six months ended June 30, 2007. Balance Sheet � � June 30, � (dollars in thousands) � 2008 � 2007 � %Change Total assets $ 2,045,103 � $ 1,915,463 7 % � Total loans (net) 1,298,308 1,070,353 21 % � Total deposits 1,546,672 1,532,449 1 % � Total core deposits � � 1,532,208 � � 1,514,453 � 1 % � Lending Total gross loans increased $230.0 million, or 21%, to $1.31 billion from $1.08 billion one year ago, with the growth represented across all loan categories. The composition of the Company�s loan portfolio is as follows: � � � � � � (dollars in thousands) � 06/30/08 � % ofTotal � 06/30/07 � % ofTotal � $Increase � %Increase Commercial $ 410,419 31 % $ 330,300 31 % $ 80,119 24 % Owner occupied � � 191,813 � 15 � � � 129,856 � 12 � � � 61,957 � 48 � Total commercial 602,232 46 460,156 43 142,076 31 Consumer/ residential 318,817 24 294,681 27 24,136 8 Commercial real estate � � 389,469 � 30 � � � 325,874 � 30 � � � 63,595 � 20 � Gross loans � $ 1,310,518 � 100 % � $ 1,080,711 � 100 % � $ 229,807 � 21 % � Asset Quality The Company�s asset quality ratios are highlighted below: � Quarter Ended � � June 30,2008 � March 31,2008 � June 30,2007 Non-performing assets/total assets 0.65 % � 0.22 % � 0.21 % Net loan charge-offs/average total loans 0.07 % 0.01 % 0.01 % Loan loss reserve/gross loans 0.93 % 0.96 % 0.96 % Non-performing loan coverage 95 % 309 % 278 % Non-performing assets/capital and reserves � 11 % � 4 % � 3 % � Non-performing assets and loans past due 90 days at June 30, 2008 totaled $13.3 million, or 0.65%, of total assets, as compared to $4.3 million, or 0.22% of total assets, at March 31, 2008 and $4.0 million, or 0.21%, of total assets one year ago. The increase in non-performing assets is primarily associated with four different credits totaling $7.5 million, with more than half of the increase related to one borrower. As a result, the Company�s second quarter provision for loan losses totaled $1.4 million as compared to $500,000 recorded in the second quarter of 2007. Management has performed an assessment of the collateral related to these credits and believes the allowance for loan losses remains adequate for the level of risk inherent in the loan portfolio. For the first six months of 2008, the loan loss provision totaled $2.4 million vs. $980,000 for the same period last year. Total charge-offs for the second quarter were $817,000 vs. $134,000 for the second quarter of 2007, with approximately $700,000 of this total related to two credits. Total charge-offs year-to-date were $908,000 vs. $307,000 for the first half of 2007. Core Deposits Core deposit growth by type of account is as follows: � � � June 30, (dollars in thousands) � 2008 � 2007 � %Change � 2nd Qtr 2008Cost ofFunds Demand non-interest-bearing $ 293,299 � $ 293,264 0 % 0.00 % Demand interest-bearing 705,077 654,648 8 1.48 Savings � � 341,185 � � 384,445 � (11 ) � � 1.07 � Subtotal 1,339,561 1,332,357 1 1.05 Time � � 192,647 � � 182,096 � 6 � � � 3.61 � Total core deposits � $ 1,532,208 � $ 1,514,453 � 1 � % � 1.39 % � Core deposit growth by type of customer is as follows: � � � � � June 30, % of June 30, % of % (dollars in thousands) � 2008 � Total � 2007 � Total � Change Consumer $ 670,040 44 % $ 621,620 41 % 8 % Commercial 521,874 34 545,418 36 ( 4 ) Government � � 340,294 � 22 � � � 347,415 � 23 � � ( 2 ) � Total � $ 1,532,208 � 100 % � $ 1,514,453 � 100 % � 1 � % � Investments At June 30, 2008, the Company�s investment portfolio totaled $539.5 million. Detailed below is information regarding the composition and characteristics of the Company�s investment portfolio at June 30, 2008. � � � Product Description � Availablefor Sale � Held toMaturity � Total (in thousands) Mortgage-backed securities: Federal government agencies pass through certificates $ 65,439 $ 75,924 $ 141,363 Collateralized mortgage obligations (government agency or AAA rated) 300,372 32,940 333,312 U.S. Government agencies/other � � 4,882 � � � 59,913 � � � 64,795 � Total � $ 370,693 � � $ 168,777 � � $ 539,470 � Duration (in years) 3.7 5.0 4.1 Average life (in years) 4.7 6.7 5.3 Quarterly average yield � � 4.82 % � � 5.34 % � � 4.97 % � At June 30, 2008, the after tax depreciation of the Company�s available for sale portfolio was $11.8 million as compared to $9.6 million at March 31, 2008 and vs. $5.5 million at June 30, 2007. The market for certain securities held in the Company�s available-for-sale portfolio remained volatile during the second quarter due to extraordinary economic and market dislocations. As a result of this volatility, the market prices for many types of securities at June 30, 2008 were lower than at March 31, 2008 due to the distressed market conditions. Management has reviewed such securities for continued and constant receipt of scheduled principal and interest payments as well as credit-rating adjustments. Based upon this review, management does not believe any individual unrealized loss as of June 30, 2008 represents other-than-temporary impairment. The unrealized losses on these securities are primarily the result of changes in the liquidity levels in the market in addition to changes in general market interest rates and not by material changes in the credit characteristics of the investment securities portfolio. In addition, at June 30, 2008, management had the positive intent and ability to hold these securities to recovery or maturity. Capital Stockholders� equity at June 30, 2008 totaled $112.4 million, an increase of $7.7 million, or 7%, over stockholders� equity of $104.7 million at June 30, 2007. Return on average stockholders� equity (ROE) for the second quarter and six months ended June 30, 2008 and 2007 are shown below: � Return on Equity Three Months Ended June 30, � Six Months Ended June 30, 2008 � 2007 � 2008 � 2007 12.57 % � 6.00 % � 11.98 % � 5.21 % � � The Company�s capital ratios at June 30, 2008 were as follows: � � Commerce � Regulatory Guidelines�Well Capitalized� Leverage Ratio 7.70 % 5.00 % Tier 1 10.05 % 6.00 Total Capital � 10.86 % � 10.00 � � Stockholder Returns � As of June 30, 2008 � � Commerce � NASDAQ BankIndex � S & P Index � Russell 3000Index 1 Year � (15 ) % � (33 ) % � (53 ) % � (38 ) % 5 Years 5 % ( 1 ) % ( 7 ) % 1 % 10 Years � 7 � % � 2 � % � ( 3 ) % � 2 � % � FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION The Company may, from time to time, make written or oral �forward-looking statements�, including statements contained in the Company�s filings with the Securities and Exchange Commission (including the annual report on Form 10-K and the exhibits thereto), in its reports to stockholders and in other communications by the Company, which are made in good faith by the Company pursuant to the �safe harbor� provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to the Company�s beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors (some of which are beyond the Company�s control). The words �may�, �could�, �should�, �would�, �believe�, �anticipate�, �estimate�, �expect�, �intend�, �plan� and similar expressions are intended to identify forward-looking statements. The following factors, among others discussed in the Company�s Form 10-K, could cause the Company�s financial performance to differ materially from that expressed or implied in such forward-looking statements: the Company's dependence on TD Commerce Bancorp, Inc. (and Commerce Bank, N.A.) to provide various services to the Company and the costs associated with securing alternate providers of such services; the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations; the effects of, and changes in, trade, monetary and fiscal policies, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation; the impact of the extraordinary economic and market dislocations on the fair value market prices of investment securities; interest rate, market and monetary fluctuations; the timely development of competitive new products and services by the Company and the acceptance of such products and services by customers; the willingness of customers to substitute competitors� products and services for the Company�s products and services and vice versa; the impact of changes in financial services� laws and regulations (including laws concerning taxes, banking, securities and insurance); changes in the Company�s allowance for loan losses; effect of terrorists attacks and threats of actual war; unanticipated regulatory or judicial proceedings; changes in consumer spending and saving habits; and the success of the Company at managing the risks involved in the foregoing. The Company cautions that the foregoing list of important factors is not exclusive. The Company cautions that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the Company�s actual results, performance, or achievements to differ materially from the future results, performance, or achievements the Company has anticipated in such forward-looking statements. You should note that many factors, some of which are discussed in this Press Release, could affect the Company�s future financial results and could cause those results to differ materially from those expressed or implied in the Company�s forward-looking statements contained or incorporated by reference in this document. The Company does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on behalf of the Company. For information on subsequent events, refer to the Company�s filings with the SEC. � Pennsylvania Commerce Bancorp, Inc. Selected Consolidated Financial Data (Unaudited) � � At or for the � At or for the Three Months Ended Six Months Ended June 30, June 30, (in thousands, except per share amounts) 2008 � 2007 � % Change 2008 � 2007 � % Change � Income Statement Data: Net interest income $ 19,087 $ 14,254 34 % $ 37,670 $ 27,482 37 % Provision for loan losses 1,400 500 180 2,375 980 142 Noninterest income 6,493 5,705 14 12,486 10,875 15 Total revenues 25,580 19,959 28 50,156 38,357 31 Noninterest operating expenses 19,077 17,308 10 37,978 33,798 12 Net income 3,506 1,571 123 6,712 2,683 150 � Per Common Share Data: Net income: Basic $ 0.55 $ 0.25 120 % $ 1.05 $ 0.43 144 % Net income: Diluted 0.54 0.24 125 1.03 0.41 151 � Book Value $ 17.53 $ 16.60 6 % � Weighted average shares outstanding: Basic 6,341 6,223 6,334 6,195 Diluted 6,504 6,458 6,499 6,430 � Balance Sheet Data: Total assets $ 2,045,103 $ 1,915,463 7 % Loans (net) 1,298,308 1,070,353 21 Allowance for loan losses 12,210 10,358 18 Investment securities 539,470 657,120 (18 ) Total deposits 1,546,672 1,532,449 1 Core deposits 1,532,208 1,514,453 1 Stockholders' equity 112,371 104,721 7 � Capital: Stockholders' equity to total assets 5.49 % 5.47 % Leverage ratio 7.70 7.22 Risk based capital ratios: Tier 1 10.05 10.03 Total Capital 10.86 10.78 � Performance Ratios: Cost of funds 1.73 % 3.30 % 1.92 % 3.35 % Deposit cost of funds 1.18 2.43 1.31 2.58 Net interest margin 4.10 3.19 4.08 3.11 Return on average assets 0.71 0.33 0.69 0.29 Return on average total stockholders' equity 12.57 6.00 11.98 5.21 � Asset Quality: Net charge-offs to average loans outstanding 0.07 % 0.03 % Nonperforming assets to total period-end assets 0.65 0.21 Allowance for loan losses to total period-end loans 0.93 0.96 Allowance for loan losses to nonperforming loans 95 278 Nonperforming assets to capital and reserves 11 % 3 % � � Pennsylvania Commerce Bancorp, Inc. and Subsidiaries Average Balances and Net Interest Income (unaudited) � � � Quarter ending, � Year-to-date, � � � � � � � � � � � � � � � � � June 2008 � March 2008 � June 2007 � June 2008 � June 2007 Average Average Average Average Average Average Average Average Average Average Balance � Interest � Rate Balance � Interest � Rate Balance � Interest � Rate Balance � Interest � Rate Balance � Interest � Rate (dollars in thousands) Earning Assets Investment securities Taxable $ 572,632 $ 7,109 4.97 % $ 616,294 $ 7,927 5.14 % $ 686,714 $ 9,108 5.31 % $ 594,463 $ 15,036 5.06 % $ 695,668 $ 18,487 5.31 % Tax-exempt � � 1,622 � � 25 � 6.17 � � � 1,621 � � 25 � 6.17 � � � 1,620 � � 25 � 6.17 � � � 1,621 � � 50 � 6.17 � � � 1,619 � � 50 � 6.18 � Total securities 574,254 7,134 4.97 617,915 7,952 5.15 688,334 9,133 5.31 596,084 15,086 5.06 697,287 18,537 5.32 Federal funds sold 0 0 0.00 0 0 0.00 0 0 0.00 0 0 0.00 0 0 0.00 Loans receivable Mortgage and construction 622,055 10,248 6.53 579,577 9,992 6.83 530,395 9,695 7.24 600,816 20,240 6.67 504,177 18,169 7.17 Commercial loans and lines of credit 344,512 5,373 6.17 332,486 5,865 6.98 301,393 6,068 7.97 338,499 11,238 6.57 307,063 12,336 7.99 Consumer 235,819 3,543 6.04 226,889 3,717 6.59 201,034 3,410 6.80 231,354 7,260 6.31 197,713 6,657 6.79 Tax-exempt � � 72,240 � � 1,227 � 6.79 � � � 56,742 � � 985 � 6.94 � � � 49,847 � � 859 � 6.89 � � � 64,491 � � 2,212 � 6.86 � � � 43,303 � � 1,470 � 6.79 � Total loans receivable � � 1,274,626 � � 20,391 � 6.36 � � � 1,195,694 � � 20,559 � 6.83 � � � 1,082,669 � � 20,032 � 7.35 � � � 1,235,160 � � 40,950 � 6.59 � � � 1,052,256 � � 38,632 � 7.32 � Total earning assets � $ 1,848,880 � $ 27,525 � 5.93 % � $ 1,813,609 � $ 28,511 � 6.26 % � $ 1,771,003 � $ 29,165 � 6.55 % � $ 1,831,244 � $ 56,036 � 6.09 % � $ 1,749,543 � $ 57,169 � 6.52 % � Sources of Funds Interest-bearing deposits Regular savings $ 335,255 $ 889 1.07 % $ 349,976 $ 1,200 1.38 % $ 375,370 $ 2,365 2.53 % $ 342,616 $ 2,088 1.23 % $ 376,546 $ 4,855 2.60 % Interest checking and money market 694,178 2,548 1.48 706,625 3,360 1.91 674,125 6,138 3.65 700,401 5,909 1.70 687,338 12,990 3.81 Time deposits 199,025 1,788 3.61 166,221 1,650 3.99 190,854 2,024 4.25 182,623 3,438 3.79 195,721 4,125 4.25 Public funds time � � 24,607 � � 223 � 3.64 � � � 22,920 � � 237 � 4.16 � � � 17,839 � � 219 � 4.92 � � � 23,763 � � 460 � 3.89 � � � 18,720 � � 455 � 4.90 � Total interest-bearing deposits 1,253,065 5,448 1.75 1,245,742 6,447 2.08 1,258,188 10,746 3.43 1,249,403 11,895 1.91 1,278,325 22,425 3.54 Short-term borrowings 236,957 1,338 2.23 230,749 1,911 3.28 238,520 3,204 5.31 233,853 3,249 2.75 202,087 5,423 5.34 Other borrowed money 50,000 554 4.38 50,000 555 4.39 0 0 0.00 50,000 1,109 4.39 0 0 0.00 Junior subordinated debt � � 29,400 � � 661 � 8.99 � � � 29,400 � � 661 � 8.99 � � � 29,400 � � 661 � 8.99 � � � 29,400 � � 1,322 � 8.99 � � � 29,400 � � 1,322 � 8.99 � Total interest-bearing liabilities 1,569,422 8,001 2.04 1,555,891 9,574 2.46 1,526,108 14,611 3.83 1,562,656 17,575 2.25 1,509,812 29,170 3.88 Noninterest-bearing funds (net) � � 279,458 � � � � � � 257,718 � � � � � � 244,895 � � � � � � 268,588 � � � � � � 239,731 � � � � Total sources to fund earning assets � $ 1,848,880 � $ 8,001 � 1.73 % � $ 1,813,609 � $ 9,574 � 2.11 % � $ 1,771,003 � $ 14,611 � 3.30 % � $ 1,831,244 � $ 17,575 � 1.92 % � $ 1,749,543 � $ 29,170 � 3.35 % Net interest income and margin on a tax-equivalent basis $ 19,524 4.20 % $ 18,937 4.15 % $ 14,554 3.25 % $ 38,461 4.17 % $ 27,999 3.17 % Tax-exempt adjustment � 437 � 354 � 300 � 791 � 517 Net interest income and margin � � � $ 19,087 � 4.10 % � � � $ 18,583 � 4.07 % � � � $ 14,254 � 3.19 % � � � $ 37,670 � 4.08 % � � � $ 27,482 � 3.11 % � � � Other Balances: Cash and due from banks $ 43,842 $ 46,913 $ 51,842 $ 45,378 $ 50,119 Other assets 83,137 89,927 90,813 86,533 90,277 Total assets 1,975,859 1,950,449 1,913,658 1,963,155 1,889,939 Demand deposits (noninterest-bearing) 283,693 270,345 274,794 277,019 268,443 Other liabilities 10,577 11,041 7,725 10,810 7,813 Stockholders' equity � � 112,167 � � � � � � 113,172 � � � � � � 105,031 � � � � � � 112,670 � � � � � � 103,871 � � � � � � Pennsylvania Commerce Bancorp, Inc. and Subsidiaries Summary of Allowance for Loan Losses and Other Related Data (unaudited) � � � � � � � (dollar amounts in thousands) 6/30/2008 � 6/30/2007 Year-ended 12/31/2007 6/30/2008 � 6/30/2007 � Three Months Ended � � Six Months Ended � Balance at beginning of period $ 11,627 $ 9,992 $ 9,685 $ 10,742 $ 9,685 Provisions charged to operating expense � � 1,400 � � � 500 � � � 1,762 � � � 2,375 � � � 980 � 13,027 10,492 11,447 13,117 10,665 � Recoveries on loans charged-off: Commercial 7 1 11 131 2 Consumer 17 9 53 23 14 Real estate � � 0 � � � 0 � � � 8 � � � 0 � � � 8 � Total recoveries 24 10 72 154 24 � Loans charged-off: Commercial (719 ) (86 ) (634 ) (884 ) (262 ) Consumer (70 ) (58 ) (69 ) (108 ) (67 ) Real estate � � (52 ) � � 0 � � � (74 ) � � (69 ) � � (2 ) � Total charged-off � � (841 ) � � (144 ) � � (777 ) � � (1,061 ) � � (331 ) � Net charge-offs � � (817 ) � � (134 ) � � (705 ) � � (907 ) � � (307 ) � Balance at end of period � $ 12,210 � � $ 10,358 � � $ 10,742 � � $ 12,210 � � $ 10,358 � � Net charge-offs as a percentage of average loans outstanding 0.07 % 0.01 % 0.07 % 0.07 % 0.03 % � Allowance for loan losses as a percentage of period-end loans 0.93 % 0.96 % 0.93 % 0.93 % 0.96 % � � Pennsylvania Commerce Bancorp, Inc. and Subsidiaries Summary of Non-Performing Loans and Assets (unaudited) � � � � � � � June 30, March 31, December 31, September 30, June 30, 2008 � 2008 � 2007 � 2007 � 2007 Nonaccrual loans: Commercial $ 2,577 $ 1,158 $ 534 $ 997 $ 1,362 Consumer 125 120 57 57 54 Real Estate: Construction 735 284 385 529 520 Real Estate � 3,433 � � � 2,183 � � � 1,959 � � � 1,767 � � � 1,784 � Total nonaccrual loans 6,870 3,745 2,935 3,350 3,720 Loans past due 90 days or more and still accruing 6,036 15 0 0 0 Renegotiated loans � 0 � � � 0 � � � 0 � � � 0 � � � 0 � Total nonperforming loans 12,906 3,760 2,935 3,350 3,720 � Foreclosed real estate � 421 � � � 588 � � � 489 � � � 390 � � � 300 � � Total nonperforming assets $ 13,327 � � $ 4,348 � � $ 3,424 � � $ 3,740 � � $ 4,020 � � � Nonperforming loans to total loans 0.98 % 0.31 % 0.25 % 0.30 % 0.34 % � Nonperforming assets to total assets 0.65 % 0.22 % 0.17 % 0.19 % 0.21 % � Nonperforming loan coverage 95 % 309 % 366 % 319 % 278 % � Allowance for loan losses as a percentage of total period-end loans 0.93 % 0.96 % 0.93 % 0.96 % 0.96 % � Nonperforming assets / capital plus allowance for loan losses 11 % 4 % 3 % 3 % 3 % �