People’s Bank Reports Earnings

·9 min read

People’s Bank of Commerce (OTCBB: PBCO) announced today its financial results for the third quarter and year-to-date 2020. The bank reported net income of $1,937,000 or $0.55 per basic and diluted share for the third quarter of 2020, compared to net income of $947,000 or $0.30 per share in the same quarter of 2019. Earnings for the first nine months of 2020 totaled $4,433,000 or $1.28 per share compared to $2,719,000 or $0.89 per share during the first three quarters of 2019. Earnings per share for the trailing 12 months ending September 30, 2020 were $1.71 per share compared to $1.19 during the same period one year earlier.

Balance sheet September 30, 2020 vs. September 30, 2019:

  • Total Loans increased 35%

  • Total Deposits increased 37%

  • Total Assets increased 37%

  • Total Equity increased 31%

Income statement year-to date September 30, 2020 vs. September 30, 2019:

  • Net-interest Income increased 10%

  • Pre-tax income increased 56%

  • Mortgage lending income up by 308%

  • Non-interest Income increased 44%

  • Non-interest Expense increased 1%

CEO’s Comments

"Over five years ago the bank created a strategic plan that focused on the development of non-interest income that would stabilize the bank’s earnings during periods of low interest rates. Today we are seeing the benefits of that strategy as interest rates are again at all-time lows. While low rates are detrimental to our overall net interest income after provision, up only 1% over the same period in 2019, they do enhance the income potential of our Home Lending Department. The bank’s factoring company, purchased in 2017, is also contributing good, consistent non-interest income, even considering the pandemic shutdown in April and May of this year. The Paycheck Protection Program (PPP) processing fee income also contributed to a very strong first nine months of 2020. Total loan growth, excluding PPP loans, has been very soft through the 3rd quarter of 2020, while deposits are up 37%, some of which can also be attributed to PPP," stated Ken Trautman, People’s Bank CEO.

"Last year I said that 2019 had been a year of change for the bank, which included a core processing conversion as well as staff reductions in our branch system due to improved technology and processing centralization. The year 2020 has been a year of adaptation as we navigate through the COVID-19 reality, face devastating wildfires and wait for a return to normalcy," added Trautman.

"The year’s unique circumstances of increased fee income due to the pandemic has enabled the bank and its employees to substantially contribute to the rebuilding of the Rogue Valley community after the tragic fires which displaced nearly 3,000 families," commented Trautman. "Through a donation to the People’s Bank of Commerce Foundation of more than $1.2 million, the bank and its employees are proud to support the newly formed Southern Oregon Housing Initiative. This collaboration of community businesses and partners is diligently working to develop solutions for intermediate and long-term housing for fire victims."

Provision for Credit Losses

The bank’s year-to-date provision for loan and lease losses was $1.2 million compared a provision of $211 thousand during the same period last year. This increase was a hedge against the unknown credit issues that could arise because of the COVID-19 pandemic. In spite of COVID-19, credit quality remains strong with no loans past due over 90 days or on non-accrual at September 30, 2020, consistent with the same time in 2019. At the end of the third quarter 2020, the loan loss reserve for portfolio loans, excluding PPP loans, was 1.56% compared to 1.12% at the end of the third quarter 2019.

Non-Interest Income

For the quarter ending September 30, 2020, non-interest income was $3.1 million compared to $1.70 million in the same quarter one year earlier. For the first three quarters of 2020, non-interest income was significantly higher than the previous year with $7.1 million compared to $4.9 million year-to-date in 2019. The bank’s home lending division generated $3.1 million in non-interest income while Steelhead Finance, the bank’s factoring division, generated $2.8 million during the three quarters of 2020.

Non-Interest Expense

For the quarter ending September 30, 2020, non-interest expense was $4.3 million compared to $3.9 million in the same quarter of 2019. Year-to-date non-interest expense totaled $11.6 million through September 30, 2020, compared to $11.4 million in the same period the prior year.

Capital

As of September 30, 2020, shareholder’s equity totaled $50.9 million, compared to $38.8 million at September 30, 2019. The bank’s Tier 1 capital ratio was 9.40% at the end of the third quarter 2020, compared to 9.73% one year ago. Tangible Book value per share was $13.25 on September 30, 2020, compared to $11.23 on September 30, 2019.

About People’s Bank of Commerce

People’s Bank of Commerce’s 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 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

Balance Sheet (unaudited)

(dollars in thousands)

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

Assets

Cash and due from banks

3,659

3,398

7,459

3,711

2,798

Federal funds sold

Interest-bearing deposits

49,336

57,717

14,899

11,936

16,004

Investment securities

22,910

23,597

27,172

27,734

23,212

Loans held for sale

17,386

8,106

6,648

2,474

3,909

Loans held for investment,

355,855

354,170

269,752

278,277

271,635

net of unearned income

Allowance for loan and lease losses

(4,271

)

(4,024

)

(3,378

)

(3,119

)

(3,033

)

Loans, net

351,584

350,146

266,374

275,158

268,602

Premises and equipment, net

20,664

20,469

20,170

20,306

20,529

Other assets

34,423

30,308

31,383

28,855

28,818

Total assets

499,963

493,742

374,105

370,174

363,872

Liabilities

Deposits

Demand noninterest-bearing

219,836

199,808

141,448

136,051

140,458

Demand interest-bearing

54,711

46,396

38,257

44,341

47,020

Money market and savings

134,053

125,023

112,238

107,985

108,614

Time deposits of less than $250,000

20,012

20,897

16,231

15,715

15,419

Time deposits of more than $250,000

3,282

2,318

2,578

2,701

2,949

Total deposits

431,894

394,442

310,752

306,793

314,460

Other liabilities

17,217

50,358

16,603

21,722

10,611

Total liabilities

449,111

444,800

327,355

328,515

325,071

Capital

Common stock, surplus, retained earnings

50,162

48,222

46,622

41,663

38,879

Accumulated other comprehensive

690

720

128

208

249

income (loss)

Unearned ESOP Shares

-

-

-

(212

)

(327

)

Total shareholders' equity

50,852

48,942

46,750

41,659

38,801

Total Liabilities and Equity

499,963

493,742

374,105

370,174

363,872

memo:

Total intangible assets and goodwill

3,486

3,486

3,486

3,486

3,486

Current shares outstanding

3,523,078

3,522,857

3,500,065

3,241,075

3,122,591

People's Bank of Commerce

Income Statement (unaudited)

Three Months Ended

Twelve Months Ended

(dollars in thousands)

9/30/2020

6/30/2020

9/30/2019

9/30/2020

9/30/2019

Interest Income

Loans

4,065

3,874

3,672

15,339

14,032

Investments

133

157

160

607

608

Federal funds sold and due from banks

28

26

136

190

498

Total interest income

4,226

4,057

3,968

16,136

15,138

Interest Expense

Deposits

177

181

354

951

1,328

Other

41

67

5

152

91

Total interest expense

218

248

359

1,103

1,419

Net interest income

4,008

3,809

3,609

15,033

13,719

Provision for credit losses

247

644

113

1,235

323

Net Interest Income after provision

3,761

3,165

3,496

13,798

13,395

for credit losses

Non-Interest Income

Service charges on deposit accounts

55

54

84

275

307

Mortgage lending income

1,604

960

294

3,571

914

Steelhead Finance income

1,074

808

1,044

3,737

4,337

Gain (loss) on other real estate

-

-

-

-

Other non-interest income

332

291

273

1,247

892

Total non-interest income

3,065

2,113

1,695

8,830

6,450

Non-Interest Expense

Salary and Benefits

2,779

2,116

2,434

9,548

9,585

Premises and fixed assets

556

543

544

2,235

2,194

Other

1,012

838

883

3,265

3,391

Total non-interest expense

4,347

3,497

3,861

15,048

15,170

Net income before taxes

2,479

1,781

1,330

7,580

4,676

Income taxes

542

396

383

1,797

1,075

Net income

1,937

1,385

947

5,783

3,601

Basic earnings per share

0.55

0.39

0.30

1.71

1.19

Diluted earnings per share

0.55

0.39

0.30

1.70

1.19

Average common shares outstanding

3,523,004

3,522,783

3,122,591

3,389,579

3,028,945

Performance Measures

Return on average assets

1.58

%

1.16

%

1.02

%

1.35

%

1.04

%

Return on average equity

15.55

%

11.53

%

9.88

%

12.75

%

9.73

%

Net interest margin

3.68

%

3.61

%

4.54

%

4.09

%

4.27

%

Efficiency ratio

61.46

%

59.05

%

72.79

%

63.06

%

75.21

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20201028005912/en/

Contacts

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