People’s Bank Reports First Quarter Earnings

MEDFORD, Ore.–(BUSINESS WIRE)–People’s Bank of Commerce (OTCBB: PBCO) announced today its financial results for the first quarter of 2020. The bank reported net income of $1,111,000 or $0.33 per diluted share for the first quarter of 2020 compared to net income of $839,000 or $0.28 per diluted share in the same quarter of 2019. Earnings per share for the trailing 12 months were $1.36 per share up from $1.20 per share the previous period, a 13% increase.

Highlights for the quarter compared to the first quarter of 2019:

  • Net loans increased 5%
  • Deposits decreased 1%
  • The bank’s total assets increased 3%
  • Net interest income, before provision, increased 6%
  • Non-Interest income increased by 24%
  • Non-interest expenses held flat
  • Loan Loss Provision increased by $200 thousand as a buffer for the effects of COVID-19

President’s Comments

“If I had written this earning’s release a month ago, I would have focused on a very successful first quarter, with pre-tax earnings up 52% before our special COVID-19 provision,” commented Ken Trautman, President and CEO. “I would have mentioned that our strategy of diversifying income by increasing non-interest income sources was progressing along nicely. This would have been supported by the numbers; our mortgage department reporting a 163% increase in gross income and total non-interest income up 24%. Now, these results all pale to what we have accomplished in our attempt to support our customers and community during this war on COVID-19. As a Preferred Lender with SBA, we are in a unique position to react immediately to the provisions of the CARES Act, specifically the Paycheck Protection Program (PPP) component. As of April 9th, we have received funding approval for over 250 loans, totaling just under $50 million dollars, with a large pipeline of qualified, pending applicants still to be processed. Bank personnel have worked around the clock to contact customers and process applications. We are also working with businesses in our communities that are not currently our customers, helping them obtain loans, because this will affect the health and well-being of all. The SBA PPP loans, the loan modifications on existing loans and the loan deferrals we are doing will make a significant difference in the success of our community and our businesses.”

Provision for Credit Losses

“Loan quality continues to be strong with no loans past due over 30 days or on Non-Accrual at the end of the first quarter of 2020. Part of the decrease in net loans was the payoff of non-accrual loans on the bank’s books at the end of 2019. However, due to current circumstances, the bank has increased its reserve to outstanding loans from 1.12% at the end of the first quarter of 2019 to 1.25% at the end of the same quarter in 2020. The provision to increase the allowance for loan and lease losses was $260,000 in 2020 compared to $59,000 in 2019,” commented Mr. Trautman.

Non-Interest Income

Non-interest income for the first quarter of 2020 was $1,927,000 compared to $1,555,000 for the same quarter of 2019, a 24% increase. With low mortgage interest rates, the bank’s mortgage division had an outstanding quarter, contributing over $550,000 in revenue. Steelhead Finance, the bank’s factoring division, contributed over $950,000 in revenue in the first quarter.

Non-Interest Expense

Non-interest expense for the first quarter of 2020 was $3,761,000 compared to $3,767,000 for the same quarter of 2019, down less than 1%. Total personnel expense was up 3% compared to 2019, while fixed asset costs, advertising costs and supply costs were all down.

Capital

At March 31, 2020, shareholder equity totaled $46.8 million, compared to $36.5 million at March 31, 2019. This includes the successful $5 million capital raise that was completed during the quarter. The bank’s Tier 1 Capital ratio was 11.64% at the end of the first quarter 2020, compared to 9.21% one year ago. Tangible book value per share was $12.32 on March 31, 2020, compared to $11.15 on March 31, 2019.

About People’s Bank of Commerce

People’s Bank of Commerce stock trades on the over-the-counter market under the symbol PBCO. Additional information about the Bank is available in the investor section of the bank’s website at: www.peoplesbank.bank.

Founded in 1998, People’s Bank of Commerce is the only locally owned and managed community bank in Southern Oregon. People’s Bank of Commerce is a full-service, commercial bank headquartered in Medford, Oregon with branches in Medford, Ashland, Central Point, Grants Pass and Klamath Falls.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:

This release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as People’s Bank or its management “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases of similar import. Similarly, statements herein that describe People’s Bank’s business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements.

People’s Bank of Commerce
Income Statement (unaudited)

Three Months Ended

 

Twelve Months Ended

(dollars in thousands)

3/31/2020

 

12/31/2019

 

3/31/2019

 

3/31/2020

 

3/31/2019

Interest Income
Loans

3,671

 

3,729

 

3,475

 

14,614

 

12,927

 

Investments

160

 

158

 

156

 

607

 

640

 

Federal funds sold and due from banks

63

 

72

 

108

 

365

 

559

 

Total interest income

3,894

 

3,959

 

3,739

 

15,586

 

14,127

 

 
Interest Expense
Deposits

279

 

316

 

347

 

1,298

 

1,054

 

Other

30

 

13

 

5

 

54

 

240

 

Total interest expense

309

 

329

 

352

 

1,352

 

1,294

 

 
Net interest income

3,585

 

3,630

 

3,387

 

14,234

 

12,832

 

Provision for credit losses

260

 

85

 

59

 

496

 

343

 

Net Interest Income after provision for credit losses

3,325

 

3,545

 

3,328

 

13,738

 

12,489

 

 
Non-Interest Income
Service charges on deposit accounts

82

 

83

 

67

 

328

 

300

 

Mortgage lending income

553

 

454

 

210

 

1,562

 

649

 

Steelhead Finance income

951

 

903

 

1,051

 

3,961

 

4,881

 

Gain (loss) on other real estate

 

 

 

Other non-interest income

341

 

285

 

227

 

1,171

 

833

 

Total non-interest income

1,927

 

1,725

 

1,555

 

7,022

 

6,662

 

 
Non-Interest Expense
Salary and Benefits

2,443

 

2,209

 

2,380

 

9,512

 

9,239

 

Premises and fixed assets

532

 

603

 

549

 

2,226

 

2,038

 

Other

786

 

630

 

838

 

3,144

 

3,385

 

Total non-interest expense

3,761

 

3,442

 

3,767

 

14,882

 

14,661

 

 
Net income before taxes

1,491

 

1,828

 

1,116

 

5,878

 

4,490

 

Income taxes

380

 

478

 

277

 

1,537

 

978

 

Net income

1,111

 

1,350

 

839

 

4,341

 

3,513

 

 
Basic earnings per share

0.33

 

0.43

 

0.28

 

1.36

 

1.20

 

Diluted earnings per share

0.33

 

0.43

 

0.28

 

1.36

 

1.20

 

Average common shares outstanding

3,342,993

 

3,169,537

 

2,955,964

 

3,186,346

 

2,962,202

 

 
Performance Measures
Return on average assets

1.18

%

1.46

%

0.94

%

1.18

%

1.03

%

Return on average equity

10.16

%

13.57

%

9.29

%

10.93

%

10.30

%

Net interest margin

4.43

%

4.74

%

4.33

%

4.55

%

4.17

%

Efficiency ratio

68.23

%

64.28

%

76.22

%

70.01

%

75.21

 

%

 

People’s Bank of Commerce
Balance Sheet (unaudited)
(dollars in thousands)

3/31/2020

 

12/31/2019

 

9/30/2019

 

6/30/2019

 

3/31/2019

Assets
Cash and due from banks

7,459

3,711

2,798

3,747

4,736

Federal funds sold
Interest-bearing deposits

14,899

11,936

16,004

18,694

30,152

Investment securities

27,172

27,734

23,212

22,585

20,031

Loans held for sale

6,648

2,474

3,909

2,013

1,157

Loans held for investment, net of unearned income

269,752

278,277

271,635

261,835

256,389

Allowance for loan and lease losses

(3,378)

(3,119)

(3,033)

(2,920)

(2,880)

Loans, net

266,374

275,158

268,602

258,915

254,666

Premises and equipment, net

20,170

20,306

20,529

20,736

21,086

Other assets

31,383

28,855

28,818

31,185

30,894

Total assets

374,105

370,174

363,872

357,875

361,565

 
 
Liabilities
Deposits
Demand noninterest-bearing

141,448

136,051

140,458

136,211

128,937

Demand interest-bearing

38,257

44,341

47,020

46,690

56,175

Money market and savings

112,238

107,985

108,614

105,310

110,237

Time deposits of less than $250,000

16,231

15,715

15,419

17,915

16,750

Time deposits of more than $250,000

2,578

2,701

2,949

2,682

1,873

Total deposits

310,752

306,793

314,460

308,808

313,972

Other liabilities

16,603

21,722

10,611

11,308

11,137

Total liabilities

327,355

328,515

325,071

320,116

325,109

 
Capital
Common stock, surplus, retained earnings

46,622

41,663

38,879

37,913

36,863

Accumulated other comprehensive income (loss)

128

208

249

212

(2)

Unearned ESOP Shares

(212)

(327)

(366)

(405)

Total shareholders’ equity

46,750

41,659

38,801

37,759

36,456

 
Total Liabilities and Equity

374,105

370,174

363,872

357,875

361,565

 
memo:
Total intangible assets and goodwill

3,486

3,486

3,486

3,486

3,486

 
Current shares outstanding

3,500,065

3,241,075

3,122,591

3,122,155

2,955,964

 

Contacts

Ken Trautman, President and CEO
(541) 774-7654, ken@peoplesbank.bank

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