People’s Bank Year-to-Date Earnings Increase 35%

People’s Bank of Commerce (OTCBB: PBCO) announced today its financial results for the second quarter and year-to-date 2017. The bank reported net income of $483,000 or $0.20 per basic and diluted share for the second quarter of 2017, compared to net income of $448,000 or $0.19 per share in the same quarter of 2016. Earnings for the first six months of 2017 totaled $1,011,000 or $0.43 per share compared to $746,000 or $0.34 per share during the first half of 2016. Earnings per share for the trailing 12 months ending 6/30/2017 were $0.93 per share compared to $0.66 one year earlier, a 41% increase.

Balance Sheet June 30, 2017 vs. June 30, 2016:

• Total Loans increased 12%
• Total Deposits increased 8%
• Total Assets increased 8%

Income Statement year-to date June 30, 2017 vs. June 30, 2016:

• Net-Interest Income increased 14%
• Non-Interest Income increased 8%
• Non-interest Expense increased 12%

Balance Sheet

Total loans have increased 12% in the past 12 months and deposits have increased 8% in that same period. However, loan growth in 2017 has been much slower with a 1.8% increase since the first of the year. Deposits are up 5.8% during 2017. Ken Trautman, bank President and CEO explained: “Most of the loan deals completed in 2016 were refinanced loans from other lenders while 2017 has brought in mostly new business loans. Many of these new loans in 2017 are commercial construction loans that do not add to our loan totals until they advance over the next 6 to 12 months.”

Provision for Credit Losses

Mr. Trautman continued, “With net charged off loans being negative (recoveries exceeding losses) during all of 2016 and 2017, the provision for loan and lease losses has decreased significantly from earlier periods. Credit quality remains strong with $92 thousand or 0.04% of total loans past due over 30 days or on non-accrual at June 30, 2017, compared to $1.3 million or 0.73% at June 30, 2016.” At the end of the second quarter 2017, the loan loss reserve was 1.15% of loans held for investment compared to 1.20% at the end of the second quarter 2016.

Non-Interest Income

For the quarter ending June 30, 2017, non-interest income was $429 thousand compared to $549 thousand in the same quarter one year earlier. Second quarter income in 2016 was positively affected by one-time gains and, conversely, 2017 mortgage income was 17% below that of 2016. For the first half of 2017, non-interest income was slightly higher than the previous year with $949 thousand compared to $879 thousand year-to-date in 2016.

Non-Interest Expense

For the quarter ending June 30, 2017, non-interest expense was $2.4 million compared to $2.1 million in 2016. Year-to-date non-interest expense totaled $4.7 million through June 30, 2017, compared to $4.2 million in the same period the prior year. Mr. Trautman explained: “Accounting rules require certain loan fees offset personnel expense. With loan production down in 2017, these offsets have not been realized, causing a 16% increase in personnel expense. This should reverse during the remainder of the year.”

Capital

As of June 30, 2017, shareholder’s equity totaled $27.2 million, compared to $25.2 million at June 30, 2016. The bank’s leverage ratio was 9.6% at the end of the second quarter 2017, compared to 9.5% one year ago. Book value per share was $11.34 on June 30, 2017, compared to $11.04 on June 30, 2016, when adjusted for the 5% stock dividend received in May of 2017.

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.peoplesbankofcommerce.com.

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 and Grants Pass.

"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)		6/30/2017			3/31/2017			12/31/2016			9/30/2016			6/30/2016			3/31/2016
Assets
Cash and due from banks		11,713			10,181			13,091			11,897			8,800			11,645
Federal funds sold														-			-
Interest-bearing deposits		14,164			11,067			1,585			4,510			11,896			25,365
Investment securities		31,315			29,883			33,181			37,242			37,423			41,020
Loans held for sale		2,295			1,603			294			615			473			716
Loans held for investment,		202,891			199,990			199,337			192,653			183,018			174,728
net of unearned income
Allowance for loan and lease losses		(2,339	)		(2,300	)		(2,342	)		(2,303	)		(2,198	)		(2,058	)
Loans, net		200,552			197,690			196,995			190,350			180,820			172,670
Premises and equipment, net		7,432			7,088			6,970			6,946			7,034			5,854
Other assets		13,947			13,966			13,783			13,000			13,622			13,813
Total assets		281,418			271,478			265,899			264,560			260,068			271,083
Liabilities
Deposits
Demand non-interest-bearing		113,979			106,171			97,208			97,223			89,761			87,079
Demand interest-bearing		23,882			22,858			24,643			21,637			22,127			18,421
Money market and savings		97,656			97,137			98,838			98,613			99,784			115,295
Time deposits of less than $100,000		8,406			8,501			8,428			8,550			10,729			12,369
Time deposits of more than $100,000		8,131			8,224			9,020			10,810			10,634			11,715
Total deposits		252,054			242,891			238,137			236,833			233,035			244,879
Other liabilities		2,208			1,986			1,683			2,042			1,879			1,676
Total liabilities		254,262			244,877			239,820			238,875			234,914			246,555
Shareholders' Equity
Common stock, surplus, retained earnings		27,067			26,578			26,050			25,359			24,745			24,258
Accumulated other comprehensive		89			23			29			326			409			270
income (loss)
Total shareholders' equity		27,156			26,601			26,079			25,685			25,154			24,528
Total Liabilities and Equity		281,418			271,478			265,899			264,560			260,068			271,083

People's Bank of Commerce
Income Statement (unaudited)
		Three Months Ended										Twelve Months Ended
(dollars in thousands)		6/30/2017			3/31/2017			6/30/2016				6/30/2017			6/30/2016
Interest Income
Loans		2,597			2,484			2,297				9,948			8,542
Investments		180			176			204				748			773
Federal funds sold and due from banks		30			12			23				67			69
Total interest income		2,807			2,672			2,524				10,763			9,384
Interest Expense
Deposits		100			93			130				405			498
Other		-			-			-				-			-
Total interest expense		100			93			130				405			498
Net interest income		2,707			2,579			2,394				10,358			8,886
Provision for credit losses		30			(36	)		134				133			296
Net Interest Income after provision		2,677			2,615			2,260				10,225			8,590
for credit losses
Non-Interest Income
Service charges on deposit accounts		67			78			70				287			270
Mortgage lending income		156			240			189				860			684
Gain (loss) on other real estate		52						-				52			(111	)
Other non-interest income		154			201			290				823			882
Total non-interest income		429			519			549				2,022			1,725
Non-Interest Expense
Salary and benefits		1,395			1,407			1,189				5,284			4,836
Premises and fixed assets		354			335			327				1,367			1,244
Other		624			588			622				2,391			2,252
Total non-interest expense		2,373			2,330			2,138				9,042			8,332
Net income before taxes		733			804			671				3,205			1,983
Income taxes		250			276			223				1,060			540
Net income		483			528			448				2,145			1,443
Basic earnings per share *		0.20			0.23			0.19				0.93			0.66
Diluted earnings per share *		0.20			0.23			0.19				0.93			0.66
Average common shares outstanding *		2,394,360			2,279,022			2,350,893				2,307,857			2,175,671
Performance Measures
Return on average assets		0.69	%		0.80	%		0.67	%			0.80	%		0.58	%
Return on average equity		7.10	%		7.97	%		7.23	%			8.16	%		6.10	%
Net interest margin		4.26	%		4.33	%		3.90	%			4.19	%		3.87	%
Efficiency ratio		75.67	%		75.21	%		72.65	%			73.04	%		78.52	%
* adjusted for 5% stock dividend May 2016, May 2017

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