People’s Bank Year-to-date Earnings per Share Increase 24%

People’s Bank of Commerce (OTCBB: PBCO) announced today its financial results for the second quarter and year-to-date 2020. The bank reported net income of $1,385,000 or $0.39 per basic and diluted share for the second quarter of 2020, compared to net income of $933,000 or $0.30 per share in the same quarter of 2019. Earnings for the first six months of 2020 totaled $2,496,000 or $0.72 per share compared to $1,772,000 or $0.58 per share during the first half of 2019. Earnings per diluted share for the trailing 12 months ending June 30, 2020 were $1.46 per share compared to $1.21 one year earlier.

Balance Sheet June 30, 2020 versus June 30, 2019:

• Total Loans increased 37%, PPP loans accounted for 94.8% of the total increase
• Total Deposits increased 28%
• Total Assets increased 38%
• Total Equity increased 30%
• Year to Date Return on Average Assets as of June 30, 2020 was 1.17%
• Year to Date Return on Average Equity as of June 30, 2020 was 10.88%

Income Statement year-to date June 30, 2020 versus June 30, 2019:

• Net-interest Income before the provision for losses increased 9%
• Pre-tax income increased 40%
• Non-interest Income increased 25%
• Non-interest Expense decreased 4%

CEO’s Comments

“Total loans and deposits continued to grow through the first half of 2020, at 37% and 28% respectively, significantly aided by the Paycheck Protection Program (PPP),” stated Ken Trautman, bank CEO. “The Net Interest Margin experienced compression in second quarter, resulting from the bank’s portfolio of PPP loans originated during the quarter with a 1% fixed interest rate,” explained Trautman. “The bank is also receiving strong income from our residential mortgage lending division. Residential mortgage opportunities are expected to continue throughout the balance of this year based on the continued low home loan rates.”

Provision for Credit Losses

Mr. Trautman continued, “Credit quality remains strong with no loans past due over 90 days or on non-accrual at the end of June 2020. Although problem assets have not materialized as a result of the COVID-19 pandemic, the bank has used its strong earnings to build its loan loss reserve for portfolio loans (excluding PPP loans) to 1.46% at the end of the second quarter 2020, compared to 1.12% for the same period in 2019.”

Non-Interest Income

For the quarter ending June 30, 2020, non-interest income was $2.1 million compared to $1.7 million in the same quarter one year earlier. For the first half of 2020, non-interest income was $4.0 million compared to $3.2 million year-to-date in 2019. The bank’s Steelhead Finance Division generated $1.8 million in non-interest income during the first half of 2020, compared to $2.1 million in the same period the prior year, a direct result of the economic slowdown caused by the COVID-19 pandemic. This reduction in Steelhead income was completely offset by the significant increase in income generated by our Residential Lending Division, which produced $1.5 million in income during the first half of 2020 compared to $471 thousand in income for the same period last year.

Non-Interest Expense

For the quarter ending June 30, 2020, non-interest expense was $3.5 million compared to $3.8 million in 2019. Year-to-date non-interest expense totaled $7.3 million through June 30, 2020, compared to $7.6 million in the same period the prior year. Mr. Trautman explained, “The most significant item impacting non-interest expense during 2020 was salary expense, which decreased 5%, the result of operating efficiencies gained by improved digital platforms and centralization of duties, as well as expense offsets recognized from PPP processing fees.”

Capital

As of June 30, 2020, shareholder’s equity totaled $49 million, compared to $38 million at June 30, 2019. Five million of the increase in shareholder equity was the result of the capital campaign completed in the first quarter of 2020, the balance was supported by bank earnings. The bank’s modified Tier 1 Capital Ratio, which excludes Paycheck Protection Program Liquidity Facility (PPPLF) advances, was 9.82% at the end of the second quarter 2020, compared to 9.61% one year ago. Tangible Book value per share was $12.70 at June 30, 2020, compared to $10.91 on June 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
Income Statement (unaudited)
		Three Months Ended											Twelve Months Ended
(dollars in thousands)		6/30/2020			3/31/2020			6/30/2019					6/30/2020			6/30/2019
Interest Income
Loans		3,874			3,671			3,543					14,945			13,513
Investments		157			160			130					634			600
Federal funds sold and due from banks		26			63			92					298			544
Total interest income		4,057			3,894			3,765					15,877			14,657
Interest Expense
Deposits		181			279			350					1,129			1,216
Other		67			30			6					115			162
Total interest expense		248			309			356					1,244			1,378
Net interest income		3,809			3,585			3,409					14,633			13,279
Provision for credit losses		644			260			39					1,101			280
Net Interest Income after provision		3,165			3,325			3,370					13,532			12,999
for credit losses
Non-Interest Income
Service charges on deposit accounts		54			82			78					304			299
Mortgage lending income		960			553			261					2,261			751
Steelhead Finance income		808			951			1,062					3,707			4,631
Gain (loss) on other real estate		-			-			-					-			-
Other non-interest income		291			341			274					1,188			818
Total non-interest income		2,113			1,927			1,675					7,460			6,499
Non-Interest Expense
Salary and Benefits		2,116			2,443			2,425					9,203			9,448
Premises and fixed assets		543			532			547					2,223			2,110
Other		838			786			844					3,135			3,336
Total non-interest expense		3,497			3,761			3,816					14,561			14,894
Net income before taxes		1,781			1,491			1,229					6,431			4,604
Income taxes		396			380			296					1,638			1,003
Net income		1,385			1,111			933					4,793			3,601
Basic earnings per share		0.39			0.33			0.30					1.46			1.21
Diluted earnings per share		0.39			0.33			0.30					1.31			1.21
Average common shares outstanding		3,522,783			3,342,993			3,110,261					3,289,476			2,975,770
Performance Measures
Return on average assets		1.16	%		1.18	%		0.94	%				1.20	%		1.04	%
Return on average equity		11.53	%		10.16	%		9.29	%				11.28	%		10.24	%
Net interest margin		3.61	%		4.43	%		4.33	%				4.31	%		4.27	%
Efficiency ratio		59.05	%		68.23	%		75.06	%				65.91	%		75.31	%

Balance Sheet (unaudited)
(dollars in thousands)		6/30/2020			3/31/2020			12/31/2019			9/30/2019			6/30/2019
Assets
Cash and due from banks		3,398			7,459			3,711			2,798			3,747
Federal funds sold
Interest-bearing deposits		57,717			14,899			11,936			16,004			18,694
Investment securities		23,597			27,172			27,734			23,212			22,585
Loans held for sale		8,106			6,648			2,474			3,909			2,013
Loans held for investment,		354,170			269,752			278,277			271,635			261,835
net of unearned income
Allowance for loan and lease losses		(4,024	)		(3,378	)		(3,119	)		(3,033	)		(2,920	)
Loans, net		350,146			266,374			275,158			268,602			258,915
Premises and equipment, net		20,469			20,170			20,306			20,529			20,736
Other assets		30,309			31,383			28,855			28,818			31,185
Total assets		493,742			374,105			370,174			363,872			357,875
Liabilities
Deposits
Demand noninterest-bearing		199,808			141,448			136,051			140,458			136,211
Demand interest-bearing		46,396			38,257			44,341			47,020			46,690
Money market and savings		125,023			112,238			107,985			108,614			105,310
Time deposits of less than $250,000		20,897			16,231			15,715			15,419			17,915
Time deposits of more than $250,000		2,318			2,578			2,701			2,949			2,682
Total deposits		394,442			310,752			306,793			314,460			308,808
Other liabilities		50,358			16,603			21,722			10,611			11,308
Total liabilities		444,800			327,355			328,515			325,071			320,116
Capital
Common stock, surplus, retained earnings		48,222			46,622			41,663			38,879			37,913
Accumulated other comprehensive		720			128			208			249			212
income (loss)
Unearned ESOP Shares		-			-			(212	)		(327	)		(366	)
Total shareholders' equity		48,942			46,750			41,659			38,801			37,759
Total Liabilities and Equity		493,742			374,105			370,174			363,872			357,875
memo:
Total intangible assets and goodwill		3,486			3,486			3,486			3,486			3,486
Current shares outstanding		3,522,857			3,500,065			3,241,075			3,122,591			3,122,155

 

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