Pennsylvania Commerce Bancorp Inc.'s first-quarter profits plunged 74% from a year earlier, to $837,000, or 13 cents a share, as it took a higher loan-loss provision and spent money to prepare for an acquisition.
The $2.1 billion-asset Harrisburg company's results, announced Friday, fell 21 cents short of the average analyst estimate.
Deposit and loan growth remained highlights for Pennsylvania Commerce. Overall core deposits grew 7%, to $1.66 billion, and consumer core deposits surged 25%, to $802 million. Loans increased 19%, to $1.43 billion.
But the provision more than tripled, to $3.2 million, as nonperforming assets rose more than sevenfold, to $30.4 million. Nonperformers as a percentage of total assets jumped 122 basis points, to 1.44%.
Pennsylvania Commerce, which was modeled after Commerce Bancorp Inc. in Cherry Hill, N.J., agreed in November to buy Republic Bancorp Inc. of Philadelphia. (Vernon W. Hill, who founded Commerce Bancorp and cofounded Pennsylvania Commerce, is a major investor in Republic.)
Preparations for the acquisition, which is expected to close this year, added $230,000 to Pennsylvania Commerce's first-quarter noninterest expenses, the company said.
Its New Jersey namesake is now a part of Toronto-Dominion Bank, which Pennsylvania Commerce uses for processing and network infrastructure services. Pennsylvania Commerce said in January it plans to replace Toronto-Dominion with Fiserv Inc. this year. On Friday, Pennsylvania Commerce said getting ready for that switch cost it $588,000 last quarter.
After the earnings were reported, Pennsylvania Commerce's shares dropped about 5% from Thursday's close, to $21.01.