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

MEDFORD, Ore.--(BUSINESS WIRE)--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