People’s Bank of Commerce Reports 17% Increase in Net Income

MEDFORD, Ore.--(BUSINESS WIRE)-- People’s Bank of Commerce (OTCBB: PBCO) announced today its financial results for the quarter and year ending December 31, 2015. The bank reported net income of $1,405,000 or $0.65 per diluted share for the year 2015, compared to net income of $1,196,000 or $0.57 per diluted share in 2014. Net income for the fourth quarter of 2015 was $224,000 or $0.10 per diluted share, compared to $323,000 or $0.15 per diluted share for the same period in 2014.

Highlights for the quarter and year-to-date included:

• Net Loans increased $12.8 million for the year 2015, or 9%, and as of December 31, 2015, were $158.4 million.
• Deposit growth over the past 12 months was $33.9 million or 18%, with over $19.4 million in new non-interest-bearing deposits, providing strong support for loan growth.
• Net interest income for the year 2015 of $8.3 million was up over $900,000, or 12%, compared to the $7.4 million for the same period in 2014.
• Net income for the year 2015 was $1.4 million, a 17% increase or $200,000 more than the $1.2 million reported in 2014.
• Quarterly net income for the first three quarters of 2015 grew steadily and was $335,000, $374,000 and $472,000 for the first, second and third quarters of 2015, respectively. The net income of $224,000 for the fourth quarter of 2015 was down from the three previous quarters, as the result of two events. First, a write-down in the value of a parcel of bank-owned real estate (OREO) by $111,000, based on a current appraisal; and, second, reduced home mortgage income in the final quarter of 2015.
• For the twelve months ending December 31, 2015 the bank’s net interest margin was 4.05% compared to 4.24% for the same period last year. For the three months ending December 31, 2015, the bank’s net interest margin was 3.76% compared to 4.35% during the same period last year, but remains higher than the bank’s FDIC peer bank group.
• The bank had no loans on non-accrual or 90 days past due at the quarterly reporting dates in 2015 or at year end 2014.
• The efficiency ratio was 88.24% for the fourth quarter of 2015 compared to 80.48% for the year 2015, versus 81.15% for the year 2014. Lower fourth quarter income caused the high ratio in the final quarter.
• ROE and ROA for the fourth quarter 2015 were 3.75% and 0.37%, respectively, and 6.08% and 0.62%, respectively, during 2015.

Regarding the bank’s recent performance, President and CEO Ken Trautman stated, “Our five branches located throughout Southern Oregon, from Ashland to Grants Pass, are performing well as evidenced by the strong loan and deposit growth in 2015. This growth translates into increased net interest income and provides the engine for continued growth in earnings and shareholder value. Credit quality continues to remain strong as represented by no non-current loans being reported at any quarter end during 2015. The bank has three parcels of bank-owned real estate (OREO), the largest of which is under escrow and scheduled to close in the first quarter of 2016 at a modest gain. A second parcel that was revalued as mentioned, and the third parcel, will be aggressively marketed for disposition at the earliest opportunity. Our local economic trends are positive and we look forward to continued successes as we move forward.”

Net Interest Income

Net interest income was $8.3 million for all of 2015, compared to $7.4 million in 2014. For the three months ending December 31, 2015, net interest income totaled $2.1 million, compared to $2.0 million for the same period in the prior year.

Provision for Credit Losses

The provision for credit losses in 2015 was $77,000, compared to $25,000 in 2014, including a credit to the provision in the first half of the year. During the fourth quarter of 2015, there was no provision for credit losses, compared to $99,000 for the same period in the prior year.

Non-Interest Income

Non-interest income in 2015 totaled $1.9 million, compared to $1.7 million in 2014, an increase of 10%. During the three months ending December 31, 2015, non-interest income totaled $241,000, compared to $482,000 during the same period in 2014.

Non-Interest Expense

Non-interest expense was $8.2 million in 2015, compared to $7.4 million in 2014. During the three months ending December 31, 2015, non-interest expense was $2.1 million, compared to $1.9 million for the same period in 2014. Salary expense during the fourth quarter 2015 was $1.2 million, compared to $1.1 million during the same period in 2014.

Balance Sheet

The bank had total assets of $250.1 million at December 31, 2015, compared to $214.7 million at the end of 2014, representing growth of $35.3 million, or 16%.

Total net loans outstanding at December 31, 2015 were $158.4 million, compared to $145.6 million at December 31, 2014, an increase of $12.8 million or 9%.

Total deposits were $224.5 million at December 31, 2015, compared to $190.6 million at December 31, 2014, an increase of $33.9 million, or 18%.

Credit Quality

The allowance for loan and lease losses was $1.96 million or 1.22% of loans held for investment at December 31, 2015, compared to $1.83 million or 1.24% of loans held for investment at the end of 2014. Non-performing assets totaled $3.3 million at the end of 2015, compared to $3.4 million at the end of 2014. The bank had no loans on non-accrual or 90 days past due at the end of 2015 or 2014. Non-performing assets consisted entirely of OREO. The bank recognized $52,900 in net loan recoveries during the year ending December 31, 2015.

Capital Adequacy

At December 31, 2015, shareholder equity totaled $24.0 million, compared to $22.5 million at December 31, 2014. The bank’s leverage ratio was 9.6% as of December 31, 2015, compared to 10.4% at the end of 2014. As a result of strong asset growth, the bank’s estimated total risk-based capital ratio was 13.6% as of December 31, 2015, compared to 14.6% for December 31, 2014. These capital ratios continue to be above amounts required for the bank to be considered “well-capitalized” according to regulatory standards. Book value increased to $11.09 at December 31, 2015, compared to $10.41 at the end of 2014.

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 on 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. We are proud to have built our business by developing relationships, meeting the needs of our customers through personal service and responding to their changing needs, while maintaining our commitment to quality products and service. People’s Bank of Commerce is a full service bank headquartered in Medford, Oregon with branches in Medford, Ashland, Central Point and Grants Pass. For more information, contact Brande Cowden, marketing officer, 541-774-7653.

"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)			12/31/2015				9/30/2015				6/30/2015				3/31/2015				12/31/2014
Assets
Cash and due from banks			11,498				12,113				13,620				15,201				14,999
Federal funds sold			-				-				-				-				8,190
Interest-bearing deposits			13,950				12,445				6,965				13,300				-
Investment securities			44,927				35,520				33,228				30,669				27,440
Loans held for sale			2,393				1,458				2,905				1,535				1,074
Loans held for investment, net of unearned income			160,341				155,154				149,922				149,331				147,416
Allowance for loan and lease losses			(1,964	)			(1,957	)			(1,887	)			(1,895	)			(1,834	)
Loans, Net			158,377				153,197				148,035				147,436				145,582
Premises and equipment, net			5,128				4,520				4,064				4,013				3,967
Other assets			13,786				13,675				13,689				13,555				13,426
Total assets			250,059				232,928				222,506				225,709				214,678
Liabilities
Deposits
Demand noninterest-bearing			86,745				82,237				86,039				76,158				67,332
Demand interest-bearing			18,498				15,789				12,627				16,300				20,661
Money market and savings			94,619				87,060				82,134				91,340				84,422
Time deposits of less than $100,000			12,515				12,142				7,564				8,021				8,104
Time deposits of more than $100,000			12,093				10,262				9,322				9,443				10,049
Total Deposits			224,470				207,490				197,686				201,262				190,568
Other liabilities			1,562				1,703				1,597				1,547				1,593
Total liabilities			226,032				209,192				199,284				202,809				192,160
Shareholders' Equity
Common Stock, surplus, retained earnings			23,956				23,515				23,046				22,672				22,325
Accumulated other comprehensive income (loss)			71				221				176				228				193
Total shareholders' equity			24,027				23,736				23,222				22,900				22,518
Total Liabilities and Equity			250,059				232,928				222,506				225,709				214,678

People's Bank of Commerce
Income Statement (unaudited)
			Three Months Ended												Twelve Months Ended
(dollars in thousands)			12/31/2015				9/30/2015				12/31/2014				12/31/2015				12/31/2014
Interest Income
Loans			2,054				2,031				1,951				8,031				7,304
Investments			191				162				108				641				401
Federal funds sold and due from banks			14				14				19				58				75
Total Interest Income			2,259				2,207				2,078				8,730				7,780
Interest Expense
Deposits			127				104				95				418				375
Other			-				-				-				-				7
Total Interest Expense			127				104				95				418				382
Net Interest Income			2,132				2,103				1,983				8,312				7,398
Provision for Credit Losses			-				69				99				77				25
Net Interest Income after provision for credit losses			2,132				2,034				1,884				8,235				7,373
Non-Interest Income
Service charges on deposit accounts			65				72				60				272				229
Mortgage lending income			134				243				282				966				854
Gain (loss) on other real estate			(111	)			-				-				(120	)			-
Other non-interest income			153				290				140				782				648
Total non-interest income			241				605				482				1,900				1,730
Non-Interest Expense
Salary and benefits			1,236				1,183				1,114				4,946				4,526
Premises and fixed assets			313				291				260				1,122				1,022
Other			545				552				512				2,151				1,859
Total non-interest expense			2,094				2,026				1,886				8,219				7,407
Net income before taxes			279				613				480				1,916				1,696
Income taxes			55				141				157				511				500
Net income			224				472				323				1,405				1,196
Basic Earnings per share *			0.10				0.22				0.15				0.67				0.59
Diluted Earnings per share *			0.10				0.21				0.15				0.65				0.57
Average common shares outstanding *			2,166,159				2,131,707				2,144,850				2,089,316				2,030,094
Performance Measures
Return on average assets			0.37	%			0.84	%			0.61	%			0.62	%			0.60	%
Return on average equity			3.75	%			8.13	%			5.75	%			6.08	%			5.50	%
Net interest margin			3.76	%			3.99	%			4.35	%			4.05	%			4.34	%
Efficiency ratio			88.24	%			74.82	%			76.51	%			80.48	%			81.15	%
* adjusted for 5% stock dividends in March and August 2015

View source version on businesswire.com: http://www.businesswire.com/news/home/20160120006581/en/

People’s Bank of Commerce
Ken Trautman, 541-774-7654
President and CEO
[email protected]

Source: People’s Bank of Commerce

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