Canada Markets closed

People’s Bank Reports Third Quarter Earnings

  • Oops!
    Something went wrong.
    Please try again later.
·15 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

MEDFORD, Ore., October 20, 2021--(BUSINESS WIRE)--People’s Bank of Commerce (OTC PINK: PBCO) announced today its financial results for the 3rd quarter of 2021.

Highlights

  • Third quarter net income of $2,650,000, or $0.53 per diluted share

  • Year-to-date net income of $8,496,000, or $1.85 per diluted share

  • Quarterly non-PPP loan growth rate of 14.5%

  • Third quarter tax equivalent net interest margin of 3.7%, excluding factoring revenue

  • Steelhead factoring revenue increased 66.2% over Q3 2020

People’s Bank reported quarterly net income of $2,650,000, or $0.53 per diluted share, for the 3rd quarter of 2021 compared to net income of $1,937,000, or $0.53 per diluted share, in the same quarter of 2020. The bank recognized year-to-date net income of $8,496,000 versus $4,433,000 for the nine months of 2020, a 91.6% increase from the prior year. Earnings per share for the trailing 12 months were $2.36 per share, up from $1.69 per share for the same period of 2020, a 39.3% increase. Third quarter income continued to be positively impacted by PPP fee income due to pro-ration of the remaining unamortized origination processing fees at payoff with $1,271,000 in PPP fee income recognized during the quarter. Steelhead Finance also demonstrated solid revenue of $1,785,000 during the quarter, versus $1,074,000 in 3rd quarter 2020. During the quarter, the bank made a provision for loan losses of $347,000. The Bank also charged-off two non-accrual loans totaling $199,000 during the third quarter. As anticipated with the bank’s recent acquisition of Willamette Community Bank (WMCB) in the 1st quarter, the bank was able to achieve higher earnings per share than in previous periods.

During the quarter, deposits increased $37.7 million, or an annualized 21.2% growth rate. On an annual basis, deposits grew by $318.8 million, a 73.8% increase from September 30, 2020. "Of deposit growth achieved in the last 12 months, 43.4% was in non-interest DDA," commented Joan Reukauf, Chief Operating Officer. The deposit growth was due to several factors, including the bank’s acquisition of WMCB in the first quarter, the bank’s participation in the PPP loan program, and organic growth in all of our deposit markets. "The bank recently completed its system conversion for the Willamette division in September 2021, which is one of the final steps on the merger that took place March 1st of this year," added Reukauf.

The Bank continued to deploy excess liquidity to the investment portfolio as an alternative to deposits at the Federal Reserve Bank. Through the end of the quarter, the bank increased its investment portfolio by $99.8 million, a 95.8% increase from the prior quarter.

As of September 30th, core portfolio loan growth, excluding PPP, totaled $15.3 million during the 3rd quarter, representing an annualized growth rate of 14.5%. "The bank’s pipeline of approved credits remains strong, while acknowledging there has been increased pressure on loan rates from competitors," commented Julia Beattie, President.

The bank’s active role in the Paycheck Protection Program (PPP) beginning in April 2020 resulted in 1,204 PPP loans in Round I, totaling $121.2 million (includes loans funded by WMCB prior to the bank merger with People’s Bank). At the end of September 2021, 100% of Round I PPP loans had been submitted for forgiveness- only 8 loans remain in the portfolio that are being reviewed for forgiveness, totaling $328,000. Similarly, the bank funded 629 loans in Round II of the Paycheck Protection Program, representing $48.6 million in loans supporting our local businesses. Through the end of September, 164 loans funded in Round II remained outstanding, totaling $23.2 million. "Through our employee’s diligence in assisting our customers in submitting applications for forgiveness, 90.6% of total PPP loans were forgiven by the end of 3rd quarter," commented Beattie.

PPP Loan Activity To Date

As of

As of

As of

As of

(dollars in thousands)

9/30/2021*

6/30/2021*

3/31/2021*

12/31/2020

#

$$$

#

$$$

#

$$$

#

$$$

PPP Loans Funded

Round One (2020 - Phase I & II)

1,204

$121,199

1,204

$121,199

1,204

$121,199

1,056

$95,387

Round Two (2021)

629

$ 48,588

629

$ 48,588

534

$45,993

-

$0

PPP Loans Forgiven

Round One (2020 - Phase I & II)

1196

$120,871

1139

$112,136

437

$65,540

34

$14,428

Round Two (2021)

465

$ 25,377

73

$3,190

-

$0

-

$0

Net PPP Loans Outstanding

Round One (2020 - Phase I & II)

8

$328

65

$9,063

767

$55,659

1,022

$80,959

Round Two (2021)

164

$23,211

557

$45,398

534

$45,993

-

$0

Total Actual Balances outstanding

172

$23,539

622

$54,461

1,301

$101,652

1,022

$80,959

*

Includes PPP activity of Willamette Community Bank

During the quarter, the bank experienced a decrease in classified assets. This was the result of two events- the reduction of Other Real estate Owned, "ORE", and the charge-off of two loans previously on non-accrual with book values totaling $199,000. Total loans past due or on non-accrual were flat from the prior quarter. During the 3rd quarter, the Allowance for Loan and Lease Losses (ALLL) was updated based on new loan growth achieved during the quarter and updated economic expectations, which were factored into the bank’s analysis. The bank also took a recovery of $76 thousand on a loan previously charged off in 2011. As of September 30, 2021, the ALLL was 0.94% of portfolio loans excluding PPP and the unallocated reserve stood at $0.8 million or 18.2% of the allowance.

As of September 30, 2021, the bank’s Tier 1 Leverage Ratio was 8.73% versus 9.40% as of the same date in 2020, with total shareholder equity of $77.5 million. Although the bank has continued to augment capital with earnings, the merger with WMCB and ongoing deposit growth has resulted in the bank’s assets outgrowing capital in the current period.

Third quarter 2021 non-interest income totaled $2.7 million, a decrease of $328 thousand from the 3rd quarter of 2020. During the quarter, Steelhead Finance factoring revenue increased $711 thousand, a 66.2% increase over the same quarter of 2020. Conversely, mortgage income decreased $989 thousand, or a 61.7% decrease from the 3rd quarter of 2020. "Steelhead Finance continued to perform extremely well during the 3rd quarter due to increased trucking activity needed to support consumer demand," commented Ken Trautman, CEO. "Mortgage remains a key part of our business strategy, but volume has softened in the 3rd quarter versus the same period last year," added Trautman. During the quarter, the bank also updated its bargain purchase gain from the WMCB merger, resulting in a reduction to other non-interest income of $317 thousand, needed to partially offset anticipated tax consequences.

Non-interest expense totaled $5.8 million in the 3rd quarter, down $164 thousand from the 2nd quarter. Included in non-interest expense is the quarterly accrual of $250,000 for the bank’s $1 million donation to fire relief to assist with intermediate and long-term housing needs as our Southern Oregon community rebuilds. This is a non-recurring item for 2021. For the twelve months ending September 30, 2021, excluding one-time merger adjustments, earnings per share would have been $2.48, versus $1.71 for the same period ended September 30, 2020.

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, commercial bank headquartered in Medford, Oregon with branches in Albany, Medford, Ashland, Central Point, Grants Pass, Klamath Falls, Lebanon, and Salem.

"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.

(Dollars in 000's)

September 30,
2021

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

BALANCE SHEET

ASSETS

Cash and due from banks

$

4,561

$

4,752

$

4,730

$

2,819

$

3,659

Federal funds sold

-

-

-

-

-

Interest bearing deposits

100,429

148,554

163,537

91,103

49,336

Investment securities

203,913

104,155

51,631

25,894

22,910

Loans held for sale

2,802

901

4,375

3,407

17,386

Loans held for investment, net of unearned income

459,883

474,909

512,493

346,198

355,855

Total Loans, net of deferred fees and costs

462,685

475,810

516,868

349,605

373,241

Allowance for loan losses

(4,302

)

(4,076

)

(4,325

)

(4,453

)

(4,271

)

Premises and equipment, net

27,567

26,878

26,763

21,624

20,664

Bank owned life insurance

13,689

13,585

13,512

7,476

7,429

Other Assets

37,070

36,316

35,349

29,263

26,995

Total assets

$

845,612

$

805,973

$

808,065

$

523,331

$

499,963

LIABILITIES

Deposits

Demand - non-interest bearing

$

358,013

$

317,837

$

319,292

$

231,095

$

219,836

Demand - interest bearing

100,341

112,945

110,350

54,806

54,711

Money market and savings

266,004

250,326

256,462

147,481

134,053

Time deposits of less than $250,000

22,670

20,613

21,022

19,149

20,012

Time deposits of more than $250,000

3,645

11,259

12,208

3,216

3,282

Total deposits

$

750,673

$

712,979

$

719,334

$

455,747

$

431,894

Borrowed funds

7,529

6,817

6,871

6,924

10,102

Other liabilities

9,887

11,107

9,738

7,824

7,115

Total liabilities

$

768,089

$

730,904

$

735,943

$

470,495

$

449,111

STOCKHOLDERS' EQUITY

Common stock

$

60,879

$

57,104

$

57,104

$

40,379

$

40,085

Retained earnings

16,489

17,620

14,667

11,775

10,077

Accumulated other comprehensive income,

net of tax

155

345

351

682

690

Total stockholders' equity

$

77,523

$

75,069

$

72,122

$

52,836

$

50,852

Total liabilities & stockholders' equity

$

845,612

$

805,973

$

808,065

$

523,331

$

499,963

(Dollars in 000's)

3rd Quarter
2021

2nd Quarter
2021

1st Quarter
2021

4th Quarter
2020

3rd Quarter
2020

INCOME STATEMENT

INTEREST INCOME

Loans

$

6,632

$

6,673

$

5,195

$

4,308

$

4,065

Investments

544

218

141

155

133

Federal funds sold and due from banks

58

50

53

30

28

Total interest income

7,234

6,941

5,389

4,493

4,226

INTEREST EXPENSE

Deposits

218

264

200

176

177

Borrowed funds

15

15

14

26

41

Total interest expense

233

279

214

202

218

NET INTEREST INCOME

7,001

6,662

5,175

4,291

4,008

Provision for loan losses

347

(249

)

(125

)

182

247

Net interest income after provision for

loan losses

6,654

6,911

5,300

4,109

3,761

NONINTEREST INCOME

Service charges

106

108

78

57

55

Mortgage lending income

615

697

1,341

1,634

1,604

Steelhead finance income

1,785

1,587

1,308

1,239

1,074

Bargain purchase gain

(316

)

-

2,343

-

-

BOLI Income

73

66

60

37

32

Other non-interest income

474

480

347

298

300

Total noninterest income

2,737

2,938

5,477

3,265

3,065

NONINTEREST EXPENSE

Salaries and employee benefits

3,354

3,389

3,407

3,186

2,779

Occupancy & equipment expense

893

800

925

590

556

Advertising expense

396

392

388

277

182

Professional expenses

110

353

547

406

127

Data processing expense

324

333

2,067

242

222

Other operating expenses

708

682

351

356

481

Total noninterest expense

5,784

5,948

7,685

5,057

4,347

Income before taxes

3,608

3,901

3,092

2,317

2,479

Provision for income taxes

958

948

200

619

542

NET INCOME

$

2,650

$

2,953

$

2,892

$

1,698

$

1,937

Average shares outstanding*

4,962,936

4,802,978

3,977,422

3,560,096

3,640,440

Earnings per share

$

0.53

$

0.61

$

0.73

$

0.48

$

0.53

*Adjusted for stock dividend 9/22/21

(Dollars in 000's)

September 30,
2021

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

Financial Highlights

Total loans

$

462,685

$

475,810

$

516,868

$

349,605

$

373,241

Total deposits

$

750,673

$

712,979

$

719,334

$

455,747

$

431,894

Total assets

$

845,612

$

805,973

$

808,065

$

523,331

$

499,963

Net income

$

2,650

$

2,953

$

2,892

$

1,698

$

1,937

Steelhead Finance contribution, pre-tax

$

1,089

$

970

$

679

$

531

$

399

Mortgage contribution, pre-tax

$

212

$

308

$

610

$

751

$

720

Performance Ratios

Return on average assets

1.27

%

1.46

%

1.82

%

1.31

%

1.58

%

Return on average equity

13.79

%

16.05

%

19.11

%

13.10

%

15.55

%

Net interest margin

3.70

%

3.68

%

3.64

%

3.75

%

3.68

%

Yield on loans

5.53

%

5.39

%

5.11

%

4.66

%

4.36

%

Cost of deposits

0.12

%

0.15

%

0.14

%

0.16

%

0.17

%

Efficiency ratio

59.39

%

61.96

%

72.15

%

66.93

%

61.46

%

Full-time equivalent employees

140

138

143

106

103

Capital

Leverage ratio

8.73

%

8.83

%

8.44

%

9.36

%

9.40

%

Common equity tier 1 ratio

N/A(1)

N/A(1)

N/A(1)

N/A(1)

N/A(1)

Tier 1 risk based ratio

N/A(1)

N/A(1)

N/A(1)

N/A(1)

N/A(1)

Total risk based ratio

N/A(1)

N/A(1)

N/A(1)

N/A(1)

N/A(1)

Book value per share

$

15.37

$

15.63

$

15.02

$

14.85

$

13.75

Tangible book value per share

$

14.61

$

14.82

$

14.20

$

13.87

$

12.80

Asset Quality

Allowance for loan losses (ALLL)

$

4,302

$

4,076

$

5,782

$

4,873

$

4,271

Nonperforming loans (NPLs)

$

665

$

876

$

1,134

$

191

$

129

Nonperforming assets (NPAs)

$

1,443

$

1,845

$

2,162

$

1,220

$

1,157

Classified assets(2)

$

3,275

$

3,138

$

3,345

$

2,550

$

2,764

ALLL as a percentage of net loans

0.94

%

0.86

%

1.13

%

1.41

%

1.16

%

ALLL as a percentage of NPLs

646.63

%

465.33

%

509.94

%

2546.18

%

3305.27

%

Net charge offs (recoveries) to average loans

0.03

%

0.00

%

0.00

%

0.00

%

0.00

%

Net NPLs as a percentage of total loans

0.15

%

0.19

%

0.22

%

0.06

%

0.04

%

Nonperforming assets as a percentage of total assets

0.17

%

0.23

%

0.27

%

0.23

%

0.23

%

Classified Asset Ratio(3)

4.00

%

3.96

%

4.38

%

4.45

%

5.01

%

Past due as a percentage of total loans

0.18

%

0.18

%

0.22

%

0.05

%

0.03

%

End of period balances

Total securities and short term deposits

$

304,342

$

252,709

$

215,168

$

116,997

$

72,246

Total loans, net of allowance

$

458,383

$

471,734

$

512,543

$

345,152

$

368,970

Total earning assets

$

767,027

$

728,520

$

732,036

$

466,602

$

445,487

Total assets

$

845,612

$

805,973

$

808,065

$

523,331

$

499,963

Total noninterest bearing deposits

$

358,013

$

317,837

$

319,292

$

231,095

$

219,836

Total deposits

$

750,673

$

712,979

$

719,334

$

455,747

$

431,894

Average balances

Total securities and short term deposits

$

278,310

$

228,874

$

150,214

$

98,223

$

74,990

Total loans, net of allowance

$

465,410

$

489,813

$

397,195

$

361,982

$

364,508

Total earning assets

$

747,858

$

722,830

$

554,446

$

460,205

$

439,498

Total assets

$

834,485

$

809,623

$

635,535

$

517,187

$

491,041

Total noninterest bearing deposits

$

336,375

$

320,986

$

167,266

$

227,689

$

209,581

Total deposits

$

739,372

$

717,147

$

525,064

$

448,225

$

412,206

(1) Effective March 31, 2020, People's Bank of Commerce opted into the Community Bank Leverage Ratio and is no longer calculating risk based capital ratios.

(2) Classified assets is defined as the sum of all loan-related contingent liabilities and loans internally graded substandard or worse, impaired loans (net of government guarantees), adversely classified securities, and other real estate owned.

(3) Classified asset ratio is defined as the sum of all loan related contingent liabilities and loans internally graded substandard or worse, impaired loans (net of government guarantees), adversely classified securities, and other real estate owned, divided by bank Tier 1 capital, plus the allowance for loan losses.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211020006151/en/

Contacts

Ken Trautman, CEO
(541) 774-7654, ken@peoplesbank.bank

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting