PBCO Financial Corporation Reports Q1 2024 Earnings

PBCO Financial Corporation (OTCPK: “PBCO”), the holding company (Company) of People’s Bank of Commerce (Bank), today reported net income of $1.7 million and earnings per diluted share of $0.31 for the quarter ended March 31, 2024, compared to a loss of $3.90 million and -$0.73 per diluted share for the quarter ended December 31, 2023. Excluding one-time expenses in fourth quarter, EPS would have been $0.27 per share, resulting in an increase of $0.04 per share during first quarter when compared to core earnings from prior quarter.

Highlights

• Net interest margin increased to 3.31%, compared to 3.19% in the prior quarter
• Tangible book value per share increased to $14.05, compared to $13.86 in the prior quarter
• Loan portfolio increased by 5.91% compared to year-end 2023
• Deposits grew by 0.92% compared to year-end 2023

People’s Bank started the year strong with loan growth of $30.5 million, or 5.91%, over year-end. The new loans booked during the quarter assisted with improving the bank’s net interest margin versus the prior quarter. Credit quality remains strong, with classified assets remaining steady over the last two quarters. Nonperforming assets decreased slightly to 0.08% of total loans from 0.14% at year-end. “While the Bank has observed some weakness in the trucking industry during the first quarter, the balance of the portfolio is performing as expected,” reported Julia Beattie, President & CEO.

The first quarter was also significant as it was the first quarter with growth in deposits since Q4 2021, with deposits up $5.8 million, or 0.92%. “With the challenging rate environment over the past two years, our team has worked hard to retain and grow deposits,” noted Beattie. “Deposit growth has been one of our strategic initiatives and we are pleased to see a positive trend for the first quarter,” added Beattie.

The investment portfolio decreased 3.7% to $148.6 million during first quarter of 2024 from $154.2 million at the end of the fourth quarter of 2023. The decrease was driven by monthly principal reductions on the MBS portfolio and matured investments. The average life of the portfolio was 4.0 years at the end of the first quarter, versus 4.2 years at the prior quarter-end. Securities income was $0.68 million during the quarter, with a yield of 1.64%, versus $0.77 million, and a yield of 1.67% for the fourth quarter of 2023. As of March 31, 2024, the net after tax unrealized loss on the investment portfolio increased to $14.5 million versus $13.8 million as of December 31, 2023. The increase was primarily due to increases in market interest rates from the prior quarter which negatively affects the prices on outstanding investments. As of the first quarter 2024, liquid assets to total assets were 13.3%, including the market value of the investment portfolio less pledged investments.

First quarter 2024 non-interest income totaled $2.0 million, a decrease of $315 thousand from the fourth quarter of 2023. During fourth quarter 2023, the bank recognized $183 thousand in mortgage revenue and $174 thousand from a loan prepayment penalty, both of which were non-recurring. Factoring revenue was flat over the prior quarter.

Non-interest expenses totaled $5.4 million in the first quarter, down $7.5 million from the previous quarter. Fourth quarter non-interest expense was exacerbated by the one-time costs of a partial liquidation of the bank’s investment portfolio and closure of the mortgage division.

As of March 31, the Tier 1 Capital Ratio for PBCO Financial Corporation was 11.38% with total shareholder equity of $78.6 million, versus a Tier 1 Capital Ratio of 11.54% and total shareholder equity of $77.6 million as of December 31, 2023. The decrease in the capital ratio is directly attributed to a larger increase in assets than capital augmentation via earnings during the quarter. The Tier 1 Capital Ratio for the Bank was 13.18% at quarter-end, down from 13.39% as of December 31, 2023. Tangible Capital was $74.9 million, or 9.49% as of March 31, 2024, versus fourth quarter of 2023 at $73.8 million, or 9.73%, which increased due to improvement in earnings.

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)		3/31/2024				12/31/2023				9/30/2023				6/30/2023				3/31/2023
BALANCE SHEET
ASSETS
Cash and due from banks		$	5,592			$	6,926			$	4,502			$	6,021			$	5,097
Federal funds sold			-				-				-				-				-
Interest bearing deposits			13,303				13,127				15,732				20,469				8,224
Investment securities			148,601				154,228				200,941				220,430				234,647
Loans held for sale			-				-				449				1,863				299
Loans held for investment, net of unearned income			547,229				516,697				511,374				490,378				488,025
Total Loans, net of deferred fees and costs			547,229				516,697				511,823				492,241				488,324
Allowance for credit losses			(6,029	)			(5,863	)			(5,656	)			(5,424	)			(5,508	)
Premises and equipment, net			29,727				30,001				30,334				27,352				27,659
Bank owned life insurance			16,777				16,637				16,479				16,322				16,210
Other Assets			33,550				31,524				36,961				35,470				36,450
Total assets		$	788,750			$	763,277			$	811,116			$	812,881			$	811,103
LIABILITIES
Deposits
Demand - non-interest bearing		$	256,558			$	272,945			$	292,230			$	291,981			$	299,535
Demand - interest bearing			165,547				142,043				131,603				115,844				123,494
Money market and savings			187,329				186,875				187,952				213,715				222,834
Time deposits of less than $250,000			16,697				16,771				20,530				21,017				19,579
Time deposits of more than $250,000			9,420				11,147				9,685				8,078				8,236
Total deposits		$	635,551			$	629,781			$	642,000			$	650,635			$	673,678
Borrowed funds			67,517				49,756				86,190				79,276				54,860
Other liabilities			7,067				6,151				11,545				10,349				9,013
Total liabilities		$	710,135			$	685,688			$	739,735			$	740,260			$	737,551
STOCKHOLDERS' EQUITY
Common stock, surplus & retained earnings		$	93,076			$	91,399			$	95,516			$	93,959			$	92,433
Accumulated other comprehensive income, net of tax			(14,461	)			(13,810	)			(24,135	)			(21,338	)			(18,881	)
Total stockholders' equity		$	78,615			$	77,589			$	71,381			$	72,621			$	73,552
Total liabilities & stockholders' equity		$	788,750			$	763,277			$	811,116			$	812,881			$	811,103

Consolidated Statements of Income
(Dollars in 000's)		1st Quarter 2024			4th Quarter 2023				3rd Quarter 2023			2nd Quarter 2023				1st Quarter 2023
INCOME STATEMENT
INTEREST INCOME
Loans		$	7,907		$	7,399			$	7,071		$	6,757			$	6,350
Investments			621			766				880			970				1,035
Federal funds sold and due from banks			133			195				312			113				61
Total interest income			8,661			8,360				8,263			7,840				7,446
INTEREST EXPENSE
Deposits			2,121			1,885				1,580			1,418				746
Borrowed funds			676			794				997			520				382
Total interest expense			2,797			2,679				2,577			1,938				1,128
NET INTEREST INCOME			5,864			5,681				5,686			5,902				6,318
Provision for loan losses			175			286				252			(86	)			57
Net interest income after provision for loan losses			5,689			5,395				5,434			5,988				6,261
NONINTEREST INCOME
Service charges			124			115				119			124				119
Mortgage lending income			-			183				252			275				59
Steelhead finance income			1,202			1,192				1,224			1,291				1,465
BOLI Income			134			155				124			112				108
Other non-interest income			503			633				523			558				426
Total noninterest income			1,963			2,278				2,242			2,360				2,177
NONINTEREST EXPENSE
Salaries and employee benefits			3,374			3,804				3,332			3,990				4,000
Occupancy & equipment expense			881			899				902			875				877
Advertising expense			86			115				118			121				119
Professional expenses			234			206				194			205				214
Data processing expense			316			355				322			317				321
Loss on sale of investments			-			6,814				-			-				-
Other operating expenses			493			724				706			614				674
Total noninterest expense			5,384			12,917				5,574			6,122				6,205
Income before taxes			2,268			(5,244	)			2,102			2,226				2,233
Provision for income taxes			590			(1,338	)			544			571				560
NET INCOME		$	1,678		$	(3,906	)		$	1,558		$	1,655			$	1,673
Shares Outstanding End of Quarter			5,328,535			5,327,035				5,325,535			5,325,535				5,325,535
Average shares outstanding			5,328,035			5,326,035				5,325,535			5,325,368				5,317,065
Earnings per share		$	0.31		$	(0.73	)		$	0.29		$	0.31			$	0.31

(Dollars in 000's)		3/31/2024				12/31/2023				9/30/2023				6/30/2023				3/31/2023
Financial Highlights
Total portfolio loans		$	547,229			$	516,697			$	511,374			$	490,378			$	488,025
Total deposits		$	635,551			$	629,781			$	642,000			$	650,635			$	673,678
Total assets		$	788,750			$	763,277			$	811,116			$	812,881			$	811,103
Net income		$	1,678			$	(3,906	)		$	1,558			$	1,655			$	1,673
Steelhead Finance contribution, pre-tax		$	205			$	205			$	323			$	450			$	481
Mortgage contribution, pre-tax		$	-			$	(476	)		$	(162	)		$	(164	)		$	(259	)
Performance Ratios
Return on average assets			0.85	%			-1.97	%			0.76	%			0.82	%			0.83	%
Return on average equity			8.60	%			-22.02	%			8.53	%			9.06	%			9.48	%
Net interest margin			3.31	%			3.19	%			3.07	%			3.22	%			3.49	%
Yield on loans			5.83	%			5.68	%			5.55	%			5.46	%			5.36	%
Cost of deposits			1.33	%			1.16	%			0.96	%			0.84	%			0.44	%
Efficiency ratio			68.79	%			162.29	%			70.31	%			74.10	%			73.04	%
Efficiency ratio excluding non-recurring expenses			68.79	%			72.40	%			70.31	%			74.10	%			73.04	%
Full-time equivalent employees			132				132				148				142				146
Capital
Tier 1 Capital Ratio			11.38	%			11.54	%			11.36	%			11.15	%			10.98	%
Community Bank Leverage Ratio(1)			13.18	%			13.39	%			13.01	%			12.78	%			12.60	%
Book value per share		$	14.75			$	14.57			$	13.40			$	13.64			$	13.81
Tangible book value per share		$	14.05			$	13.86			$	12.70			$	12.93			$	13.10
Asset Quality
Allowance for loan losses (ALLL)		$	6,029			$	5,863			$	5,782			$	4,873			$	5,508
Nonperforming loans (NPLs)		$	412			$	733			$	427			$	677			$	1,280
Nonperforming assets (NPAs)		$	618			$	939			$	713			$	963			$	1,566
Classified assets(2)		$	6,442			$	6,549			$	5,800			$	5,964			$	6,984
ALLL as a percentage of net loans			1.10	%			1.13	%			1.13	%			0.99	%			1.13	%
ALLL as a percentage of NPLs			1463	%			800	%			1354	%			720	%			430	%
Net charge offs (recoveries) to average loans			0.00	%			0.01	%			0.01	%			0.00	%			0.00	%
Net NPLs as a percentage of total loans			0.08	%			0.14	%			0.08	%			0.14	%			0.27	%
Nonperforming assets as a percentage of total assets			0.08	%			0.12	%			0.09	%			0.12	%			0.19	%
Classified Asset Ratio(3)			7.61	%			7.85	%			7.53	%			7.64	%			8.83	%
Past due as a percentage of total loans			0.55	%			0.14	%			0.08	%			0.14	%			0.26	%
End of period balances
Total securities and short term deposits		$	161,904			$	167,355			$	216,673			$	240,899			$	242,871
Total loans, net of allowance		$	541,200			$	510,834			$	506,167			$	486,817			$	482,816
Total earning assets		$	709,133			$	684,052			$	728,496			$	733,140			$	731,195
Intangible Assets		$	3,741			$	3,753			$	3,766			$	3,778			$	3,790
Total assets		$	788,750			$	763,277			$	811,116			$	812,881			$	811,103
Total noninterest bearing deposits		$	256,558			$	272,945			$	292,230			$	291,981			$	299,535
Total deposits		$	635,551			$	629,781			$	642,000			$	650,635			$	673,678
Average balances
Total securities and short term deposits		$	165,584			$	201,788			$	241,049			$	242,315			$	245,101
Total loans, net of allowance		$	536,255			$	504,002			$	493,314			$	489,624			$	473,919
Total earning assets		$	701,839			$	705,790			$	734,363			$	731,939			$	719,020
Total assets		$	787,127			$	794,196			$	821,162			$	811,697			$	803,116
Total noninterest bearing deposits		$	255,204			$	273,413			$	291,470			$	293,331			$	318,548
Total deposits		$	642,420			$	643,015			$	657,331			$	675,579			$	685,318
(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 fall of -0,84 % to 11,80USD on Nasdaq OTC stock exchange (16. April 2024, 02:10 Uhr).