PBCO Financial Corporation Reports Q2 2023 Earnings

PBCO Financial Corporation (OTC PINK: PBCO), the holding company (Company) of People’s Bank of Commerce (Bank), today reported earnings of $1.65 million and earnings per diluted share of $0.31 for the quarter ended June 30, 2023, similar to $1.67 million and $0.31 per diluted share for the quarter ended March 31, 2023.

Highlights

• Portfolio loans increased 3.2% year to date as our Eugene operation gains traction
• Credit quality continues to improve with non-performing assets totaling only 0.12% of total assets
• Total non-interest expense declined slightly during the quarter from cost containment efforts
• Mortgage lending income showing improvement, reflecting the 1^st quarter strategic investment in mortgage lending personnel
• Net interest margin declined to 3.22% during the quarter from 3.49% the prior quarter, reflecting the continued challenge of the rising rate environment
• Julia Beattie appointed President and CEO after Ken Trautman’s retirement on June 30, 2023

“During 2^nd quarter, the Bank continued to focus on quality loan growth supported by improved yields in the rising rate environment,” commented Julia Beattie, President and Chief Executive Officer. Loans increased $2.4 million in the quarter, or 0.50%, compared to the first quarter of 2023. “Although at a more moderate pace, the Bank’s loan portfolio continued to grow during the quarter, with demand for loans staying strong in spite of significantly higher borrowing costs than the same period last year,” commented Julia Beattie.

Non-performing assets improved in the second quarter to 0.12%, as a percentage of total assets, versus 0.19% in the first quarter 2023. “Although credit quality has been strong from a historical perspective, non-performing loans decreased from the prior quarter with the successful resolution of a non-accrual loan,” noted Bill Whalen, Chief Credit Officer. During the second quarter, the Allowance for Loan and Lease Losses (ALLL) decreased by $84 thousand utilizing the recently implemented Current Expected Credit Loss model that went into effect in January 2023.

Deposits decreased $23.0 million during the quarter, a 3.4% decline from the first quarter of 2023. “Contraction in deposits was due to continued rate competition, both from conventional banks as well as non-banking institutions, and the effects of quantitative tightening,” commented Beattie. “We continue to focus on retention and growth of strong core deposits driven by our philosophy of relationship banking,” continued Beattie. The Bank continued to experience increased funding costs as a result of rising deposit rate pressure and borrowing costs. Furthermore, the Bank strategically bolstered liquidity by participating in the Federal Reserve Bank Term Funding Program (BTFP).

The investment portfolio decreased 6.1% to $220.4 million in second quarter of 2023 from $234.6 million at the end of the first quarter 2023. This decrease is the result of maturing investments being reinvested in loan growth and liquidity. The average life of the portfolio was 4.5 years at the end of the second quarter. Securities income was $0.97 million during the quarter, a yield of 1.76%, versus $1.04 million, and the same yield of 1.76% for the first quarter of 2023. As of June 30, 2023, the net after tax unrealized loss on the investment portfolio was $21.3 million versus $18.9 million as of March 31, 2023, due to increased market rates. Highly rated government agency and government sponsored agency investments comprise 94.5% of the investment portfolio with the balance of approximately 4.5% held in municipal investments and 0.8% held in corporate sub-debt issued by community banks. As of second quarter 2023, liquid assets to total assets were 17.0%, including the market value of the investment portfolio less pledged investments.

Second quarter 2023 non-interest income totaled $2.4 million, an increase of $183 thousand from the first quarter of 2023. The improvement was driven in large part by mortgage lending income which increased $216 thousand, from the first quarter reported income of $59 thousand. “First quarter results were reflective of the very challenging mortgage environment responding to escalation in interest rates. While many mortgage lenders chose to retract their market presence, People’s Bank opted to make an investment in mortgage lending for the future,” commented Echo Hutto, the mortgage division manager.

Non-interest expenses totaled $6.1 million in the first quarter, down $83 thousand from the previous quarter, reflecting the Bank’s continued commitment to cost containment efforts. The reduction in expenses was attained even with the increase in payroll and related expenses from the bank’s recent expansion and strategic addition of additional mortgage related staff.

As of June 30, 2023, the Tier 1 Capital Ratio for PBCO Financial Corporation was 11.15% with total shareholder equity of $72.6 million. During the quarter, the Company continued to augment capital through earnings. The Tier 1 Capital Ratio for the Bank was 12.78% at quarter-end, up from 12.60% as of March 31, 2023. Tangible Capital was $68.8 million, or 8.47% as of June 30, 2023, versus Q1 2023 at $69.8 million or 8.60%. “The Bank’s strong capital position allows for quality growth and resilience during these uncertain economic times,” commented Ms. Beattie.

Ken Trautman and his partner, Mike Sickels, founded People’s Bank of Commerce 25 years ago. Mr. Trautman served as CEO from 2008 to his recent retirement on June 30, 2023. Julia Beattie, who was named President in June 2020, has been appointed CEO. “Having had the opportunity to work very closely with Ken over the past 3 years has provided me with a strong foundation to now assume the incremental responsibilities of CEO. We will remain focused on our Bank’s mission of helping the communities we serve to thrive, not only with our product offering, but also with a focus on relationship banking and community engagement,” commented Ms. Beattie.

About PBCO Financial Corporation

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

Founded in 1998, People’s Bank of Commerce is a full-service, commercial bank headquartered in Medford, Oregon, with branches in Albany, Ashland, Central Point, Eugene, Grants Pass, Jacksonville, Klamath Falls, Lebanon, Medford, and Salem.

"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.

Consolidated Balance Sheets
	(Dollars in 000's)	6/30/2023			3/31/2023			12/31/2022			9/30/2022			6/30/2022
BALANCE SHEET
ASSETS
Cash and due from banks		$	6,021		$	5,097		$	5,514		$	14,888		$	14,800
Federal funds sold			-			-			-			-			-
Interest bearing deposits			20,469			8,224			10,869			55,770			69,980
Investment securities			220,430			234,647			236,284			246,533			244,842
Loans held for sale			1,863			299			628			894			1,333
Loans held for investment, net of unearned income			490,378			488,025			475,024			447,725			447,823
	Total Loans, net of deferred fees and costs		492,241			488,324			475,652			448,619			449,156
Allowance for loan losses			(5,424	)		(5,508	)		(5,190	)		(4,842	)		(4,767	)
Premises and equipment, net			27,352			27,659			27,888			27,286			27,657
Bank owned life insurance			16,322			16,210			14,179			14,090			13,956
Other Assets			35,470			36,450			38,098			41,173			42,081
	Total assets	$	812,881		$	811,103		$	803,294		$	843,517		$	857,705
LIABILITIES
Deposits
	Demand - non-interest bearing	$	291,981		$	299,535		$	322,809		$	343,708		$	333,985
	Demand - interest bearing		115,844			123,494			108,972			111,184			101,743
	Money market and savings		213,715			222,834			244,282			265,628			297,504
	Time deposits of less than $250,000		21,017			19,579			12,626			13,878			15,429
	Time deposits of more than $250,000		8,078			8,236			4,106			4,183			2,080
	Total deposits	$	650,635		$	673,678		$	692,795		$	738,581		$	750,741
Borrowed funds			79,276			54,860			34,449			31,604			31,690
Other liabilities			10,349			9,013			7,639			8,320			8,886
	Total liabilities	$	740,260		$	737,551		$	734,883		$	778,505		$	791,317
STOCKHOLDERS' EQUITY
Common stock, surplus & retained earnings		$	93,959		$	92,433		$	91,133		$	88,660		$	85,649
Accumulated other comprehensive income,
	net of tax		(21,338	)		(18,881	)		(22,722	)		(23,648	)		(19,261	)
	Total stockholders' equity	$	72,621		$	73,552		$	68,411		$	65,012		$	66,388
	Total liabilities & stockholders' equity	$	812,881		$	811,103		$	803,294		$	843,517		$	857,705

Consolidated Statements of Income
	(Dollars in 000's)	2nd Quarter 2023			1st Quarter 2023			4th Quarter 2022			3rd Quarter 2022			2nd Quarter 2022
INCOME STATEMENT
INTEREST INCOME
Loans		$	6,757		$	6,350		$	6,042		$	5,744		$	5,552
Investments			970			1,035			1,057			979			903
Federal funds sold and due from banks			113			61			366			406			135
	Total interest income		7,840			7,446			7,465			7,129			6,590
INTEREST EXPENSE
Deposits			1,418			746			281			244			146
Borrowed funds			520			382			276			276			273
	Total interest expense		1,938			1,128			557			520			419
NET INTEREST INCOME			5,902			6,318			6,908			6,609			6,171
Provision for loan losses			(86	)		57			403			153			113
Net interest income after provision for
	loan losses		5,988			6,261			6,505			6,456			6,058
NONINTEREST INCOME
Service charges			124			119			122			132			120
Mortgage lending income			275			59			146			282			505
Steelhead finance income			1,291			1,465			1,555			1,896			1,984
BOLI Income			112			108			87			101			95
Other non-interest income			558			426			489			571			540
	Total noninterest income		2,360			2,177			2,399			2,982			3,244
NONINTEREST EXPENSE
Salaries and employee benefits			3,990			4,000			3,868			3,317			3,914
Occupancy & equipment expense			875			877			690			841			898
Advertising expense			121			119			113			118			113
Professional expenses			205			214			358			184			192
Data processing expense			317			321			446			262			292
Other operating expenses			614			674			676			730			650
	Total noninterest expense		6,122			6,205			6,151			5,452			6,059
Income before taxes			2,226			2,233			2,753			3,986			3,243
Provision for income taxes			571			560			733			992			799
NET INCOME		$	1,655		$	1,673		$	2,020		$	2,994		$	2,444
	Shares Outstanding End of Quarter		5,325,535			5,325,535			5,325,035			5,313,424			5,308,066
	Average shares outstanding*		5,325,368			5,317,065			5,317,065			5,312,025			5,308,066
	Earnings per share	$	0.31		$	0.31		$	0.38		$	0.56		$	0.46
	*Adjusted for stock dividend 11/10/22

	(Dollars in 000's)	6/30/2023			3/31/2023			12/31/2022			9/30/2022			6/30/2022
Financial Highlights
	Total portfolio loans	$	490,378		$	488,025		$	475,024		$	447,725		$	447,823
	Total deposits	$	650,635		$	673,678		$	692,795		$	738,581		$	750,741
	Total assets	$	812,881		$	811,103		$	803,294		$	843,517		$	857,705
	Net income	$	1,655		$	1,673		$	2,020		$	2,994		$	2,444
	Steelhead Finance contribution, pre-tax	$	450		$	481		$	454		$	820		$	961
	Mortgage contribution, pre-tax	$	(164	)	$	(259	)	$	(111	)	$	(17	)	$	107
Performance Ratios
	Return on average assets		0.82	%		0.83	%		0.98	%		1.38	%		1.11	%
	Return on average equity		9.06	%		9.48	%		12.34	%		17.41	%		14.23	%
	Net interest margin		3.22	%		3.49	%		3.74	%		0.00	%		3.14	%
	Yield on loans		5.48	%		5.36	%		5.34	%		5.15	%		4.98	%
	Cost of deposits		0.84	%		0.44	%		0.16	%		0.13	%		0.08	%
	Efficiency ratio		74.10	%		73.04	%		66.09	%		56.84	%		64.35	%
	Full-time equivalent employees		142			146			146			143			148
Capital
	Leverage ratio		11.15	%		10.98	%		10.92	%		10.10	%		9.58	%
	Bank Leverage Ratio		12.78	%		12.60	%		12.55	%					12.71	%
	Book value per share	$	13.64		$	13.81		$	12.85		$	12.24		$	12.51
	Tangible book value per share	$	12.93		$	13.10		$	12.13		$	11.52		$	11.79
Asset Quality
	Allowance for loan losses (ALLL)	$	5,424		$	5,508		$	5,782		$	4,873		$	4,767
	Nonperforming loans (NPLs)	$	677		$	1,280		$	2,653		$	1,684		$	1,001
	Nonperforming assets (NPAs)	$	963		$	1,566		$	2,939		$	1,970		$	1,287
	Classified assets(2)	$	5,964		$	6,984		$	5,132		$	1,843		$	1,851
	ALLL as a percentage of net loans		1.10	%		1.13	%		1.22	%		1.09	%		1.06	%
	ALLL as a percentage of NPLs		801	%		430	%		218	%		289	%		476	%
	Net charge offs (recoveries) to average loans		0.00	%		0.00	%		0.03	%		0.02	%		0.00	%
	Net NPLs as a percentage of total loans		0.14	%		0.27	%		0.56	%		0.38	%		0.23	%
	Nonperforming assets as a percentage of total assets		0.12	%		0.19	%		0.37	%		0.23	%		0.15	%
	Classified Asset Ratio(3)		7.64	%		8.83	%		6.97	%		2.64	%		2.60	%
	Past due as a percentage of total loans		0.14	%		0.26	%		0.56	%		0.38	%		0.22	%
End of period balances
	Total securities and short term deposits	$	240,899		$	242,871		$	247,153		$	302,303		$	314,822
	Total loans, net of allowance	$	486,817		$	482,816		$	470,462		$	443,777		$	444,389
	Total earning assets	$	733,140		$	731,195		$	722,805		$	750,922		$	763,978
	Intangible Assets	$	3,778		$	3,790		$	3,802		$	3,815		$	3,828
	Total assets	$	812,881		$	811,103		$	803,294		$	843,517		$	857,705
	Total noninterest bearing deposits	$	291,981		$	299,535		$	322,809		$	343,708		$	333,985
	Total deposits	$	650,635		$	673,678		$	692,795		$	738,581		$	750,741
Average balances
	Total securities and short term deposits	$	242,315		$	245,101		$	280,254		$	324,448		$	336,810
	Total loans, net of allowance	$	489,624		$	473,919		$	452,921		$	445,852		$	445,529
	Total earning assets	$	731,939		$	719,020		$	733,175		$	770,301		$	782,340
	Total assets	$	811,697		$	803,116		$	828,608		$	866,319		$	880,100
	Total noninterest bearing deposits	$	293,331		$	318,548		$	338,418		$	344,623		$	342,067
	Total deposits	$	675,579		$	685,318		$	722,840		$	756,539		$	770,019
(1) Effective March 31, 2020, People's Bank of Commerce opted into the Community Bank Leverage Ratio and is no longer calculating risk based capital ratios.
(2) Classified assets are defined as the sum of all loan-related contingent liabilities and loans internally graded substandard or worse, impaired loans (net of government guarantees), adversely classified securities, and other real estate owned.
(3) Classified asset ratio is defined as the sum of all loan related contingent liabilities and loans internally graded substandard or worse, impaired loans (net of government guarantees), adversely classified securities, and other real estate owned, divided by bank Tier 1 capital, plus the allowance for loan losses.

 

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The PBCO Financial Registered Stock at the time of publication of the news with a raise of 0,00 % to 11,39USD on Nasdaq OTC stock exchange (19. Juli 2023, 23:20 Uhr).