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

MEDFORD, Ore.--()--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

Contacts

People’s Bank of Commerce
Ken Trautman, 541-774-7654
President and CEO
kent@peoplesbankofcommerce.com

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