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PBCO Financial Corporation Reports Q1 2024 Earnings

PBCO Financial Corporation (OTCPK: “PBCO”), the holding company (Company) of People’s Bank of Commerce (Bank), today reported net income of $1.7 million and earnings per diluted share of $0.31 for the quarter ended March 31, 2024, compared to a loss of $3.90 million and -$0.73 per diluted share for the quarter ended December 31, 2023. Excluding one-time expenses in fourth quarter, EPS would have been $0.27 per share, resulting in an increase of $0.04 per share during first quarter when compared to core earnings from prior quarter.

Highlights

  • Net interest margin increased to 3.31%, compared to 3.19% in the prior quarter
  • Tangible book value per share increased to $14.05, compared to $13.86 in the prior quarter
  • Loan portfolio increased by 5.91% compared to year-end 2023
  • Deposits grew by 0.92% compared to year-end 2023

People’s Bank started the year strong with loan growth of $30.5 million, or 5.91%, over year-end. The new loans booked during the quarter assisted with improving the bank’s net interest margin versus the prior quarter. Credit quality remains strong, with classified assets remaining steady over the last two quarters. Nonperforming assets decreased slightly to 0.08% of total loans from 0.14% at year-end. “While the Bank has observed some weakness in the trucking industry during the first quarter, the balance of the portfolio is performing as expected,” reported Julia Beattie, President & CEO.

The first quarter was also significant as it was the first quarter with growth in deposits since Q4 2021, with deposits up $5.8 million, or 0.92%. “With the challenging rate environment over the past two years, our team has worked hard to retain and grow deposits,” noted Beattie. “Deposit growth has been one of our strategic initiatives and we are pleased to see a positive trend for the first quarter,” added Beattie.

The investment portfolio decreased 3.7% to $148.6 million during first quarter of 2024 from $154.2 million at the end of the fourth quarter of 2023. The decrease was driven by monthly principal reductions on the MBS portfolio and matured investments. The average life of the portfolio was 4.0 years at the end of the first quarter, versus 4.2 years at the prior quarter-end. Securities income was $0.68 million during the quarter, with a yield of 1.64%, versus $0.77 million, and a yield of 1.67% for the fourth quarter of 2023. As of March 31, 2024, the net after tax unrealized loss on the investment portfolio increased to $14.5 million versus $13.8 million as of December 31, 2023. The increase was primarily due to increases in market interest rates from the prior quarter which negatively affects the prices on outstanding investments. As of the first quarter 2024, liquid assets to total assets were 13.3%, including the market value of the investment portfolio less pledged investments.

First quarter 2024 non-interest income totaled $2.0 million, a decrease of $315 thousand from the fourth quarter of 2023. During fourth quarter 2023, the bank recognized $183 thousand in mortgage revenue and $174 thousand from a loan prepayment penalty, both of which were non-recurring. Factoring revenue was flat over the prior quarter.

Non-interest expenses totaled $5.4 million in the first quarter, down $7.5 million from the previous quarter. Fourth quarter non-interest expense was exacerbated by the one-time costs of a partial liquidation of the bank’s investment portfolio and closure of the mortgage division.

As of March 31, the Tier 1 Capital Ratio for PBCO Financial Corporation was 11.38% with total shareholder equity of $78.6 million, versus a Tier 1 Capital Ratio of 11.54% and total shareholder equity of $77.6 million as of December 31, 2023. The decrease in the capital ratio is directly attributed to a larger increase in assets than capital augmentation via earnings during the quarter. The Tier 1 Capital Ratio for the Bank was 13.18% at quarter-end, down from 13.39% as of December 31, 2023. Tangible Capital was $74.9 million, or 9.49% as of March 31, 2024, versus fourth quarter of 2023 at $73.8 million, or 9.73%, which increased due to improvement in earnings.

About PBCO Financial Corporation

PBCO Financial Corporation’s stock trades on the over-the-counter market under the symbol PBCO. Additional information about the Company is available in the investor section of the Company’s website at: www.peoplesbank.bank.

Founded in 1998, People’s Bank of Commerce is a full-service, commercial bank headquartered in Medford, Oregon with branches in Albany, Ashland, Central Point, Eugene, Grants Pass, Jacksonville, Klamath Falls, Lebanon, Medford, 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.

Consolidated Balance Sheets
(Dollars in 000's) 3/31/2024 12/31/2023 9/30/2023 6/30/2023 3/31/2023
BALANCE SHEET
ASSETS
Cash and due from banks

$

5,592

 

$

6,926

 

$

4,502

 

$

6,021

 

$

5,097

 

Federal funds sold

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Interest bearing deposits

 

13,303

 

 

13,127

 

 

15,732

 

 

20,469

 

 

8,224

 

Investment securities

 

148,601

 

 

154,228

 

 

200,941

 

 

220,430

 

 

234,647

 

Loans held for sale

 

-

 

 

-

 

 

449

 

 

1,863

 

 

299

 

Loans held for investment, net of unearned income

 

547,229

 

 

516,697

 

 

511,374

 

 

490,378

 

 

488,025

 

Total Loans, net of deferred fees and costs

 

547,229

 

 

516,697

 

 

511,823

 

 

492,241

 

 

488,324

 

Allowance for credit losses

 

(6,029

)

 

(5,863

)

 

(5,656

)

 

(5,424

)

 

(5,508

)

Premises and equipment, net

 

29,727

 

 

30,001

 

 

30,334

 

 

27,352

 

 

27,659

 

Bank owned life insurance

 

16,777

 

 

16,637

 

 

16,479

 

 

16,322

 

 

16,210

 

Other Assets

 

33,550

 

 

31,524

 

 

36,961

 

 

35,470

 

 

36,450

 

Total assets

$

788,750

 

$

763,277

 

$

811,116

 

$

812,881

 

$

811,103

 

 
LIABILITIES
Deposits
Demand - non-interest bearing

$

256,558

 

$

272,945

 

$

292,230

 

$

291,981

 

$

299,535

 

Demand - interest bearing

 

165,547

 

 

142,043

 

 

131,603

 

 

115,844

 

 

123,494

 

Money market and savings

 

187,329

 

 

186,875

 

 

187,952

 

 

213,715

 

 

222,834

 

Time deposits of less than $250,000

 

16,697

 

 

16,771

 

 

20,530

 

 

21,017

 

 

19,579

 

Time deposits of more than $250,000

 

9,420

 

 

11,147

 

 

9,685

 

 

8,078

 

 

8,236

 

Total deposits

$

635,551

 

$

629,781

 

$

642,000

 

$

650,635

 

$

673,678

 

 
Borrowed funds

 

67,517

 

 

49,756

 

 

86,190

 

 

79,276

 

 

54,860

 

Other liabilities

 

7,067

 

 

6,151

 

 

11,545

 

 

10,349

 

 

9,013

 

Total liabilities

$

710,135

 

$

685,688

 

$

739,735

 

$

740,260

 

$

737,551

 

 
STOCKHOLDERS' EQUITY
Common stock, surplus & retained earnings

$

93,076

 

$

91,399

 

$

95,516

 

$

93,959

 

$

92,433

 

Accumulated other comprehensive income, net of tax

 

(14,461

)

 

(13,810

)

 

(24,135

)

 

(21,338

)

 

(18,881

)

Total stockholders' equity

$

78,615

 

$

77,589

 

$

71,381

 

$

72,621

 

$

73,552

 

 
Total liabilities & stockholders' equity

$

788,750

 

$

763,277

 

$

811,116

 

$

812,881

 

$

811,103

 

 
Consolidated Statements of Income
(Dollars in 000's) 1st Quarter

2024
4th Quarter

2023
3rd Quarter

2023
2nd Quarter

2023
1st Quarter

2023
INCOME STATEMENT
INTEREST INCOME
Loans

$

7,907

$

7,399

 

$

7,071

$

6,757

 

$

6,350

Investments

 

621

 

766

 

 

880

 

970

 

 

1,035

Federal funds sold and due from banks

 

133

 

195

 

 

312

 

113

 

 

61

Total interest income

 

8,661

 

8,360

 

 

8,263

 

7,840

 

 

7,446

 
INTEREST EXPENSE
Deposits

 

2,121

 

1,885

 

 

1,580

 

1,418

 

 

746

Borrowed funds

 

676

 

794

 

 

997

 

520

 

 

382

Total interest expense

 

2,797

 

2,679

 

 

2,577

 

1,938

 

 

1,128

 
NET INTEREST INCOME

 

5,864

 

5,681

 

 

5,686

 

5,902

 

 

6,318

Provision for loan losses

 

175

 

286

 

 

252

 

(86

)

 

57

Net interest income after provision for loan losses

 

5,689

 

5,395

 

 

5,434

 

5,988

 

 

6,261

 
NONINTEREST INCOME
Service charges

 

124

 

115

 

 

119

 

124

 

 

119

Mortgage lending income

 

-

 

183

 

 

252

 

275

 

 

59

Steelhead finance income

 

1,202

 

1,192

 

 

1,224

 

1,291

 

 

1,465

BOLI Income

 

134

 

155

 

 

124

 

112

 

 

108

Other non-interest income

 

503

 

633

 

 

523

 

558

 

 

426

Total noninterest income

 

1,963

 

2,278

 

 

2,242

 

2,360

 

 

2,177

 
NONINTEREST EXPENSE
Salaries and employee benefits

 

3,374

 

3,804

 

 

3,332

 

3,990

 

 

4,000

Occupancy & equipment expense

 

881

 

899

 

 

902

 

875

 

 

877

Advertising expense

 

86

 

115

 

 

118

 

121

 

 

119

Professional expenses

 

234

 

206

 

 

194

 

205

 

 

214

Data processing expense

 

316

 

355

 

 

322

 

317

 

 

321

Loss on sale of investments

 

-

 

6,814

 

 

-

 

-

 

 

-

Other operating expenses

 

493

 

724

 

 

706

 

614

 

 

674

Total noninterest expense

 

5,384

 

12,917

 

 

5,574

 

6,122

 

 

6,205

 
Income before taxes

 

2,268

 

(5,244

)

 

2,102

 

2,226

 

 

2,233

Provision for income taxes

 

590

 

(1,338

)

 

544

 

571

 

 

560

 
NET INCOME

$

1,678

$

(3,906

)

$

1,558

$

1,655

 

$

1,673

 
Shares Outstanding End of Quarter

 

5,328,535

 

5,327,035

 

 

5,325,535

 

5,325,535

 

 

5,325,535

Average shares outstanding

 

5,328,035

 

5,326,035

 

 

5,325,535

 

5,325,368

 

 

5,317,065

Earnings per share

$

0.31

$

(0.73

)

$

0.29

$

0.31

 

$

0.31

 
(Dollars in 000's) 3/31/2024 12/31/2023 9/30/2023 6/30/2023 3/31/2023
Financial Highlights
Total portfolio loans

$

547,229

 

$

516,697

 

$

511,374

 

$

490,378

 

$

488,025

 

Total deposits

$

635,551

 

$

629,781

 

$

642,000

 

$

650,635

 

$

673,678

 

Total assets

$

788,750

 

$

763,277

 

$

811,116

 

$

812,881

 

$

811,103

 

Net income

$

1,678

 

$

(3,906

)

$

1,558

 

$

1,655

 

$

1,673

 

Steelhead Finance contribution, pre-tax

$

205

 

$

205

 

$

323

 

$

450

 

$

481

 

Mortgage contribution, pre-tax

$

-

 

$

(476

)

$

(162

)

$

(164

)

$

(259

)

 
Performance Ratios
Return on average assets

 

0.85

%

 

-1.97

%

 

0.76

%

 

0.82

%

 

0.83

%

Return on average equity

 

8.60

%

 

-22.02

%

 

8.53

%

 

9.06

%

 

9.48

%

Net interest margin

 

3.31

%

 

3.19

%

 

3.07

%

 

3.22

%

 

3.49

%

Yield on loans

 

5.83

%

 

5.68

%

 

5.55

%

 

5.46

%

 

5.36

%

Cost of deposits

 

1.33

%

 

1.16

%

 

0.96

%

 

0.84

%

 

0.44

%

Efficiency ratio

 

68.79

%

 

162.29

%

 

70.31

%

 

74.10

%

 

73.04

%

Efficiency ratio excluding non-recurring expenses

 

68.79

%

 

72.40

%

 

70.31

%

 

74.10

%

 

73.04

%

Full-time equivalent employees

 

132

 

 

132

 

 

148

 

 

142

 

 

146

 

 
Capital
Tier 1 Capital Ratio

 

11.38

%

 

11.54

%

 

11.36

%

 

11.15

%

 

10.98

%

Community Bank Leverage Ratio(1)

 

13.18

%

 

13.39

%

 

13.01

%

 

12.78

%

 

12.60

%

Book value per share

$

14.75

 

$

14.57

 

$

13.40

 

$

13.64

 

$

13.81

 

Tangible book value per share

$

14.05

 

$

13.86

 

$

12.70

 

$

12.93

 

$

13.10

 

 
Asset Quality
Allowance for loan losses (ALLL)

$

6,029

 

$

5,863

 

$

5,782

 

$

4,873

 

$

5,508

 

Nonperforming loans (NPLs)

$

412

 

$

733

 

$

427

 

$

677

 

$

1,280

 

Nonperforming assets (NPAs)

$

618

 

$

939

 

$

713

 

$

963

 

$

1,566

 

Classified assets(2)

$

6,442

 

$

6,549

 

$

5,800

 

$

5,964

 

$

6,984

 

ALLL as a percentage of net loans

 

1.10

%

 

1.13

%

 

1.13

%

 

0.99

%

 

1.13

%

ALLL as a percentage of NPLs

 

1463

%

 

800

%

 

1354

%

 

720

%

 

430

%

Net charge offs (recoveries) to average loans

 

0.00

%

 

0.01

%

 

0.01

%

 

0.00

%

 

0.00

%

Net NPLs as a percentage of total loans

 

0.08

%

 

0.14

%

 

0.08

%

 

0.14

%

 

0.27

%

Nonperforming assets as a percentage of total assets

 

0.08

%

 

0.12

%

 

0.09

%

 

0.12

%

 

0.19

%

Classified Asset Ratio(3)

 

7.61

%

 

7.85

%

 

7.53

%

 

7.64

%

 

8.83

%

Past due as a percentage of total loans

 

0.55

%

 

0.14

%

 

0.08

%

 

0.14

%

 

0.26

%

 
End of period balances
Total securities and short term deposits

$

161,904

 

$

167,355

 

$

216,673

 

$

240,899

 

$

242,871

 

Total loans, net of allowance

$

541,200

 

$

510,834

 

$

506,167

 

$

486,817

 

$

482,816

 

Total earning assets

$

709,133

 

$

684,052

 

$

728,496

 

$

733,140

 

$

731,195

 

Intangible Assets

$

3,741

 

$

3,753

 

$

3,766

 

$

3,778

 

$

3,790

 

Total assets

$

788,750

 

$

763,277

 

$

811,116

 

$

812,881

 

$

811,103

 

Total noninterest bearing deposits

$

256,558

 

$

272,945

 

$

292,230

 

$

291,981

 

$

299,535

 

Total deposits

$

635,551

 

$

629,781

 

$

642,000

 

$

650,635

 

$

673,678

 

 
Average balances
Total securities and short term deposits

$

165,584

 

$

201,788

 

$

241,049

 

$

242,315

 

$

245,101

 

Total loans, net of allowance

$

536,255

 

$

504,002

 

$

493,314

 

$

489,624

 

$

473,919

 

Total earning assets

$

701,839

 

$

705,790

 

$

734,363

 

$

731,939

 

$

719,020

 

Total assets

$

787,127

 

$

794,196

 

$

821,162

 

$

811,697

 

$

803,116

 

Total noninterest bearing deposits

$

255,204

 

$

273,413

 

$

291,470

 

$

293,331

 

$

318,548

 

Total deposits

$

642,420

 

$

643,015

 

$

657,331

 

$

675,579

 

$

685,318

 

(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 are 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.

 

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