People’s Bank of Commerce Reports Earnings

MEDFORD, Ore.--()--People’s Bank of Commerce (OTCBB: PBCO) announced today its financial results for the fourth quarter and full year 2019 operations. The bank reported net income of $4,068,000 for the full year of 2019 compared to $3,398,000 in 2018, a 20% increase. In 2019 earnings per diluted share were $1.32 compared to $1.14 per diluted share during 2018, a 16% increase. Net income for the 4th quarter of 2019 totaled $1,350,000 or $0.43 per diluted share compared to $882,000 or $0.29 per diluted share for 2018, a 48% increase.

When comparing the full year 2019 net income to 2018, several significant items impact the comparison. The bank’s mortgage division increased its gross revenue to $1,219,000 in 2019 from $615,000 in 2018, a 98% increase. Steelhead Finance, the bank’s factoring division, which focuses on the trucking industry, had reduced income in 2019 when compared to 2018. The results for 2018 were a company record and reflected the extremely strong economy, while 2019 results show the slowdown in trucking activity mirroring the slowing national economy. In addition, the bank completed a core conversion in the first quarter of 2019 that resulted in increased data processing expenses, including one time conversion expenses, which totaled $739,000 in 2019 versus $579,000 in 2018.

Highlights for the quarter and year included:

  • Net loans increased $6.6 million during the fourth quarter 2019 and $28.0 million or 11.3% for the entire year.
  • Deposits decreased $7.7 million over the past 3 months as the bank reduced its high cost deposits and total deposits decreased $1.2 million for the entire year.
  • Total bank assets increased $20.6 million or 5.9% for the year.
  • Net interest income for 2019 totaled $14.0 million dollars compared to $12.3 million in 2018, a 14.6% increase.
  • Non-Interest income totaled $6.6 million in 2019 versus $6.7 million in 2018 due to changes in mortgage and Steelhead factoring discussed above.
  • Non-interest expenses totaled $14.9 million in 2019 compared to $14.2 million in 2018, a 4.9% increase.
  • The bank’s year-to-date efficiency ratio was 72.0 in 2019 and 75.0% in 2018.
  • ROAE was 10.76% in 2019 and 10.29% in 2018. For the fourth quarter of 2019, the ROAE was 13.56% compared to 10.25% for the same period in 2018.
  • ROAA was 1.13% in 2019 and 1.00% in 2018. For the fourth quarter of 2019, the ROAA was 1.46% compared to 1.03% for the same period in 2018.
  • Loans on non-accrual or past due more than 90 days at the end 2019 were 0.24% of total loans, compared to no non-accrual loans at the end of 2018.

President’s Commentary

“2019 was a year of modest growth, with assets increasing 5.9%, but with a larger improvement in profitability which increased 20%,” noted Ken Trautman, bank President and CEO. “The bank still enjoys a low cost of funds and good return on assets compared to our peer group, resulting in a net interest margin of 4.55% in 2019, compared to 4.18% in 2018. Non-interest bearing DDA comprises 44% of our total deposits. Attracting low cost deposits became increasingly more difficult in 2019 and if this continues into 2020 there could be a small net interest margin compression. Loan quality and loan demand both continue to be strong, reflective of the local markets that the bank serves,” commented Trautman.

Provision for Credit Losses

The bank had a provision expense of $296,000 in 2019 compared to $406,000 in 2018. At year-end 2019, the allowance for loan and lease losses totaled 1.121% of loans held for investment compared to 1.125% at the end of 2018. Net loan charge offs in 2019 were ($11,000) versus ($7,000) the prior year.

Capital

At December 31, 2019, tangible shareholder’s equity totaled $37.97 million, compared to $32.09 million at December 31, 2018. The bank’s tangible leverage ratio was 10.35% at year-end 2019, compared to 9.28% at December 31, 2018. The bank started a capital campaign in the 4th quarter of 2019 which added $1.5 million in new capital to the bank in 2019, with the balance of the campaign, $3.5 million, already committed and expected to close early in 2020. Tangible book value per share was $11.71 at December 31, 2019, compared to $10.35 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.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)

12/31/2019

 

9/30/2019

 

12/31/2018

 

12/31/2019

 

12/31/2018

Interest Income        
Loans

3,729

 

3,672

 

3,343

 

14,417

 

12,193

Investments

158

 

160

 

162

 

604

 

658

Federal funds sold and due from banks

72

 

136

 

161

 

413

 

534

Total interest income

3,959

 

3,968

 

3,666

 

15,434

 

13,385

         
Interest Expense        
Deposits

316

 

354

 

278

 

1,366

 

850

Other

13

 

5

 

75

 

29

 

282

Total interest expense

329

 

359

 

353

 

1,395

 

1,132

         
Net interest income

3,630

 

3,609

 

3,313

 

14,039

 

12,253

Provision for credit losses

85

 

113

 

112

 

296

 

406

Net Interest Income after provision for credit losses

3,545

 

3,496

 

3,201

 

13,743

 

11,847

         
Non-Interest Income        
Service charges on deposit accounts

83

 

84

 

78

 

312

 

308

Mortgage lending income

454

 

294

 

150

 

1,219

 

615

Steelhead Finance income

903

 

1,044

 

1,179

 

4,061

 

4,915

Gain (loss) on other real estate

-

 

-

 

-

   

113

Other non-interest income

285

 

273

 

118

 

1,058

 

704

Total non-interest income

1,725

 

1,695

 

1,525

 

6,650

 

6,655

         
Non-Interest Expense        
Salary and Benefits

2,209

 

2,434

 

2,346

 

9,448

 

8,955

Premises and fixed assets

603

 

544

 

554

 

2,243

 

1,877

Other

630

 

883

 

825

 

3,198

 

3,348

Total non-interest expense

3,442

 

3,861

 

3,725

 

14,889

 

14,180

         
Net income before taxes

1,828

 

1,330

 

1,001

 

5,504

 

4,322

Income taxes

478

 

383

 

119

 

1,436

 

924

Net income

1,350

 

947

 

882

 

4,068

 

3,398

         
Basic earnings per share

0.43

 

0.30

 

0.29

 

1.32

 

1.14

Diluted earnings per share

0.43

 

0.30

 

0.29

 

1.32

 

1.14

Average common shares outstanding

3,169,537

 

3,122,591

 

3,073,312

 

3,089,588

 

2,979,404

         
Performance Measures        
Return on average assets

1.46%

 

1.02%

 

1.03%

 

1.13%

 

1.00%

Return on average equity

13.56%

 

9.88%

 

10.25%

 

10.76%

 

10.29%

Net interest margin

4.74%

 

4.54%

 

4.11%

 

4.55%

 

4.18%

Efficiency ratio

64.28%

 

72.79%

 

77.02%

 

71.97%

 

74.99%

People's Bank of Commerce        
Balance Sheet (unaudited)        
(dollars in thousands)

12/31/2019

 

9/30/2019

 

6/30/2019

 

3/31/2019

 

12/31/2018

Assets        
Cash and due from banks

3,711

 

 

2,798

 

 

3,747

 

 

4,736

 

 

9,382

 

Federal funds sold        
Interest-bearing deposits

11,936

 

 

16,004

 

 

18,694

 

 

30,152

 

 

17,127

 

Investment securities

27,734

 

 

23,212

 

 

22,585

 

 

20,031

 

 

25,878

 

Loans held for sale

2,474

 

 

3,909

 

 

2,013

 

 

1,157

 

 

2,084

 

Loans held for investment, net of unearned income

278,277

 

 

271,635

 

 

261,835

 

 

256,389

 

 

249,949

 

Allowance for loan and lease losses

(3,119

)

 

(3,033

)

 

(2,920

)

 

(2,880

)

 

(2,812

)

Loans, net

275,158

 

 

268,602

 

 

258,915

 

 

254,666

 

 

247,137

 

Premises and equipment, net

20,306

 

 

20,529

 

 

20,736

 

 

21,086

 

 

16,807

 

Other assets

28,855

 

 

28,818

 

 

31,185

 

 

30,894

 

 

31,110

 

Total assets

370,174

 

 

363,872

 

 

357,875

 

 

361,565

 

 

349,525

 

         
         
Liabilities        
Deposits        
Demand noninterest-bearing

136,051

 

 

140,458

 

 

136,211

 

 

128,937

 

 

124,866

 

Demand interest-bearing

44,341

 

 

47,020

 

 

46,690

 

 

56,175

 

 

48,813

 

Money market and savings

107,985

 

 

108,614

 

 

105,310

 

 

110,237

 

 

117,714

 

Time deposits of less than $250,000

15,715

 

 

15,419

 

 

17,915

 

 

16,750

 

 

15,300

 

Time deposits of more than $250,000

2,701

 

 

2,949

 

 

2,682

 

 

1,873

 

 

1,317

 

Total deposits

306,793

 

 

314,460

 

 

308,808

 

 

313,972

 

 

308,010

 

Other liabilities

21,722

 

 

10,611

 

 

11,308

 

 

11,137

 

 

6,062

 

Total liabilities

328,515

 

 

325,071

 

 

320,116

 

 

325,109

 

 

314,072

 

         
Capital        
Common stock, surplus, retained earnings

41,663

 

 

38,879

 

 

37,913

 

 

36,863

 

 

36,011

 

Accumulated other comprehensive income (loss)

208

 

 

249

 

 

212

 

 

(2

)

 

(113

)

Unearned ESOP Shares

(212

)

 

(327

)

 

(366

)

 

(405

)

 

(445

)

Total shareholders' equity

41,659

 

 

38,801

 

 

37,759

 

 

36,456

 

 

35,453

 

         
Total Liabilities and Equity

370,174

 

 

363,872

 

 

357,875

 

 

361,565

 

 

349,525

 

         
memo:        
Total intangible assets and goodwill

3,486

 

 

3,486

 

 

3,486

 

 

3,486

 

 

3,486

 

         
Current shares outstanding

3,241,075

 

 

3,122,591

 

 

3,122,155

 

 

2,955,964

 

 

2,953,464

 

 

Contacts

Ken Trautman, President and CEO
541-774-7654, ken@peoplesbank.bank

Contacts

Ken Trautman, President and CEO
541-774-7654, ken@peoplesbank.bank