People’s Bank of Commerce Reports 34% Increase in Annual Net Income

MEDFORD, Ore.--(BUSINESS WIRE)--People’s Bank of Commerce (OTCBB: PBCO) announced today its financial results for the fourth quarter and 2016 operations. The bank reported net income of $520,000 or $0.22 per diluted share for the fourth quarter of 2016, compared to net income of $224,000 or $0.10 per diluted share in the same quarter of 2015. Net income for all of 2016 totaled $1,880,000 or $0.83 per diluted share compared to $1,405,000 or $0.65 per diluted share for 2015.

Highlights for the quarter and year included:

• Net loans increased $6.6 million or 3% during the fourth quarter 2016 and $38.6 million or 24% for the entire year.
• Deposits increased $1.3 million over the past 3 months and $13.7 million or 6% for the entire year.
• The bank’s total assets increased $1.3 million during the fourth quarter and $15.8 million or 6% for the entire year.
• Net interest income for 2016 totaled $9.7 million compared to $8.3 million in 2015, a 17% increase.
• Non-Interest income totaled $2.0 million in 2016 versus $1.9 million in 2015, a 3% increase.
• Non-interest expense totaled $8.6 million in 2016 compared to $8.2 million in 2015, a 4% increase.
• The bank’s year-to-date efficiency ratio was 73.25% in 2016 and 80.48% in 2015.
• ROAE was 7.46% in 2016, 6.08% in 2015.
• ROAA was 0.71% in 2016, 0.62% in 2015.
• Diluted EPS was $0.83 in 2016, $0.65 in 2015.
• One loan for $70 thousand was on non-accrual at the end of 2016. Total loans past due or on non-accrual as a percent of total loans were 0.04% in 2016 and 0.39% at the end of 2015.

Balance Sheet

“Strong loan growth experienced early in 2016 continued throughout the year and resulted in 24% growth at year-end 2016 when compared to year-end 2015. As stated in previous reports, this is the result of continuing improvement in our local economy and the benefit of being the only locally owned commercial bank in our markets,” noted Ken Trautman, bank President and CEO. “Strong loan growth provides the interest income that fuels bottom line net income, with net interest income accounting for 83% of revenue. All sources of income for the year ended 2016 totaled $11.7 million, up 14.3% over 2015. Total non-interest expense for 2016 of $8.6 million was 3% over 2015’s total of $8.2 million, driving the continued improvement in our efficiency ratio to 73.25% at year-end 2016 compared to 80.48% at year-end 2015.”

Provision for Credit Losses

Continued strong loan growth prompted a provision expense of $366 thousand in 2016 compared to $77 thousand in 2015. At year-end 2016 the allowance for loan and lease losses totaled 1.18% of loans held for investment compared to 1.22% at the end of 2015. No loans were charged off in 2016.

Capital

At December 31, 2016, shareholder equity totaled $26.1 million, compared to $24.0 million at December 31, 2015. The bank’s leverage ratio was 9.8% at year-end 2016, compared to 9.6% at December 31, 2015. As a result of strong loan growth, the bank’s estimated total risk-based capital ratio was 13.23% as of the end of 2016, compared to 14.15% for 2015. Book value per share increased to $11.44 at December 31, 2016, compared to $10.56 one year earlier.

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
Income Statement (unaudited)
	Three Months Ended						Twelve Months Ended
(dollars in thousands)	12/31/2016		9/30/2016		12/31/2015		12/31/2016		12/31/2015
Interest Income
Loans	2,479		2,388		2,054		9,324		8,032
Investments	199		193		191		811		641
Federal funds sold and due from banks	8		18		14		67		57
Total Interest Income	2,686		2,599		2,259		10,202		8,730
Interest Expense
Deposits	102		110		127		479		418
Other	-		-		-		-		-
Total Interest Expense	102		110		127		479		418
Net Interest Income	2,584		2,489		2,132		9,723		8,312
Provision for Credit Losses	36		103		-		366		77
Net Interest Income after provision for credit losses	2,548		2,386		2,132		9,357		8,235
Non-Interest Income
Service charges on deposit accounts	68		74		64		275		272
Mortgage lending income	247		217		134		770		966
Gain (loss) on other real estate					-		-		(120	)
Other non-interest income	169		299		153		908		782
Total non-interest income	484		590		351		1,953		1,900
Non-Interest Expense
Salary and benefits	1,285		1,196		1,236		4,900		4,946
Premises and fixed assets	344		334		313		1,317		1,122
Other	613		569		655		2,336		2,151
Total non-interest expense	2,242		2,099		2,204		8,553		8,219
Net income before taxes	790		877		279		2,757		1,916
Income taxes	270		263		55		877		511
Net income	520		614		224		1,880		1,405
Basic Earnings per share *	0.23		0.27		0.10		0.84		0.65
Diluted Earnings per share *	0.22		0.27		0.10		0.83		0.65
Average common shares outstanding *	2,279,022		2,279,022		2,274,467		2,240,716		2,160,232
Performance Measures
Return on average assets	0.78	%	0.92	%	0.37	%	0.71	%	0.62	%
Return on average equity	8.01	%	9.59	%	3.75	%	7.46	%	6.08	%
Net interest margin	4.17	%	4.00	%	3.76	%	3.97	%	4.05	%
Efficiency ratio	73.08	%	68.17	%	88.76	%	73.25	%	80.48	%

* adjusted for 5% stock dividend May 2016

People's Bank of Commerce
Balance Sheet (unaudited)
(dollars in thousands)	12/31/2016		9/30/2016		6/30/2016		3/31/2016		12/31/2015
Assets
Cash and due from banks	13,091		11,897		8,800		11,645		11,498
Federal funds sold	-		-		-		-		-
Interest-bearing deposits	1,585		4,510		11,896		25,365		13,950
Investment securities	33,181		37,242		37,423		41,020		44,927
Loans held for sale	294		615		473		716		2,393
Loans held for investment, net of unearned income	199,337		192,653		183,018		174,728		160,341
Allowance for loan and lease losses	(2,342	)	(2,303	)	(2,198	)	(2,058	)	(1,964	)
Loans, Net	196,995		190,350		180,820		172,670		158,377
Premises and equipment, net	6,970		6,946		7,034		5,854		5,128
Other assets	13,783		13,000		13,622		13,813		13,786
Total assets	265,899		264,560		260,068		271,083		250,059
Liabilities
Deposits
Demand noninterest-bearing	97,208		97,223		89,761		87,079		86,745
Demand interest-bearing	24,643		21,637		22,127		18,421		18,498
Money market and savings	98,838		98,613		99,784		115,295		94,619
Time deposits of less than $100,000	8,428		8,550		10,729		12,369		12,515
Time deposits of more than $100,000	9,020		10,810		10,634		11,715		12,093
Total Deposits	238,137		236,833		233,035		244,879		224,470
Other liabilities	1,683		2,042		1,879		1,676		1,562
Total liabilities	239,820		238,875		234,914		246,555		226,032
Shareholders' Equity
Common Stock, surplus, retained earnings	26,050		25,359		24,745		24,258		23,956
Accumulated other comprehensive income (loss)	29		326		409		270		71
Total shareholders' equity	26,079		25,685		25,154		24,528		24,027
Total Liabilities and Equity	265,899		264,560		260,068		271,083		250,059