PBCO Financial Corporation Reports Q3 2024 Earnings

MEDFORD, Ore.--(BUSINESS WIRE)--PBCO Financial Corporation (OTCPK: “PBCO”), the holding company (Company) of People’s Bank of Commerce (Bank), today reported net income of $1.9 million and earnings per share of $0.36 for the quarter ended September 30, 2024, compared to net income of $1.8 million and $0.33 per share for the quarter ended June 30, 2024.

Highlights

• Net interest margin of 3.51% which expanded by 2 basis points compared to prior quarter and represents the fourth consecutive quarter of margin expansion
• 2.2% increase in total deposits compared to prior quarter
• Tangible book value per share increased to $15.67, compared to $14.56 in the prior quarter
• Return on Average Assets increased to 0.97% compared to 0.90% in the prior quarter

“The Bank continued to show positive momentum in third quarter with increasing earnings per share and expansion of the net interest margin,” reported Julia Beattie, President & CEO. “We saw growth in core deposits and the Bank was able to pay off the remaining FHLB borrowings during the quarter, which helped improve our overall cost of funds. We continue to focus on risk management and driving improvement in profitability,” noted Beattie.

Total deposits grew 2.2% during third quarter and 5.3% year-to-date. “The Bank’s focus through the end of third quarter has been to retain and recapture deposit relationships with existing customers,” added Beattie. In addition to noted on-balance sheet deposit growth during third quarter, the Bank also had $8.5 million in off-balance sheet deposits that are anticipated to be brought back on balance sheet during the fourth quarter.

The investment portfolio decreased 3.3% to $139.6 million during the third quarter of 2024 from $144.3 million at the end of the second quarter. The decrease is primarily the result of matured investments along with monthly principal reductions on the MBS portfolio. The average life of the portfolio was 3.8 years at the end of the third quarter, a slight decrease from the prior quarter-end. Due to improving market rates on investments during the quarter the Company’s AOCI book loss decreased to $10.0 million at the end of the third quarter compared to $13.8 million at the end of the second quarter.

Non-interest income was $2.0 million in the third quarter, up $57 thousand from the second quarter of 2024. Factoring revenue was flat from the prior quarter, while other non-interest income was up $55 thousand, with $145 thousand recouped during the quarter on prior-year expenses of a non-performing loan that paid off in third quarter.

Non-interest expenses totaled $5.6 million in the third quarter, down $71 thousand from the previous quarter. The decrease in non-interest expense during the quarter is largely attributed to a reduction in personnel expenses of $154 thousand due to employee retirements and continued focus on personnel expense containment. Occupancy and equipment expense also improved by $106 thousand from the prior quarter with the sale and lease-back of the bank’s Lebanon branch and bringing a portion of the bank’s managed IT services in-house. These decreases in non-interest expense were offset by a significant increase in other operating expenses attributed to a $269 thousand provision for unfunded loan commitments.

As of September 30th, the Tier 1 Capital Ratio for PBCO Financial Corporation was 11.88% with total shareholder equity of $86.9 million, versus a Tier 1 Capital Ratio of 11.62% and total shareholder equity of $81.0 million as of June 30, 2024. The Tier 1 Capital Ratio for the Bank was 13.71% at quarter-end, up from 13.44% as of June 30, 2024. Tangible Capital was $83.0 million, or 10.55% as of September 30, 2024, versus second quarter of 2024 at $77.3 million, or 9.80%.

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)	9/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023
BALANCE SHEET
ASSETS
Cash and due from banks	$	5,563		$	4,679		$	5,592		$	6,926		$	4,502
Federal funds sold		-			-			-			-			-
Interest bearing deposits		21,015			16,125			13,303			13,127			15,732
Investment securities		139,564			144,321			148,601			154,228			200,941
Loans held for sale		-			-			-			-			449
Loans held for investment, net of unearned income		552,307			552,014			547,229			516,697			511,374
Total Loans, net of deferred fees and costs		552,307			552,014			547,229			516,697			511,823
Allowance for loan losses		(6,190	)		(6,066	)		(6,029	)		(5,863	)		(5,656	)
Premises and equipment, net		28,626			27,752			29,727			30,001			30,334
Bank owned life insurance		17,082			16,911			16,777			16,637			16,479
Other Assets		29,162			32,301			33,550			31,524			36,961
Total assets	$	787,129		$	788,037		$	788,750		$	763,277		$	811,116
LIABILITIES
Deposits
Demand - non-interest bearing	$	275,838		$	269,634		$	256,558		$	272,945		$	292,230
Demand - interest bearing		170,685			167,421			165,547			142,043			131,603
Money market and savings		201,703			195,359			187,329			186,875			187,952
Time deposits of less than $250,000		10,392			10,282			16,697			16,771			20,530
Time deposits of more than $250,000		4,631			5,991			9,420			11,147			9,685
Total deposits	$	663,249		$	648,687		$	635,551		$	629,781		$	642,000
Borrowed funds		28,980			50,426			67,517			49,756			86,190
Other liabilities		8,140			7,929			7,067			6,151			11,545
Total liabilities	$	700,369		$	707,042		$	710,135		$	685,688		$	739,735
STOCKHOLDERS' EQUITY
Common stock, surplus & retained earnings	$	96,769		$	94,837		$	93,076		$	91,399		$	95,516
Accumulated other comprehensive income, net of tax		(10,009	)		(13,842	)		(14,461	)		(13,810	)		(24,135	)
Total stockholders' equity	$	86,760		$	80,995		$	78,615		$	77,589		$	71,381
Total liabilities & stockholders' equity	$	787,129		$	788,037		$	788,750		$	763,277		$	811,116

Consolidated Statements of Income
(Dollars in 000's)	3rd Quarter 2024		2nd Quarter 2024		1st Quarter 2024		4th Quarter 2023			3rd Quarter 2023
INCOME STATEMENT
INTEREST INCOME
Loans	$	8,397	$	8,271	$	7,907	$	7,399		$	7,071
Investments		557		584		621		766			880
Federal funds sold and due from banks		292		181		133		195			312
Total interest income		9,246		9,036		8,661		8,360			8,263
INTEREST EXPENSE
Deposits		2,582		2,276		2,121		1,885			1,580
Borrowed funds		342		575		676		794			997
Total interest expense		2,924		2,851		2,797		2,679			2,577
NET INTEREST INCOME		6,322		6,185		5,864		5,681			5,686
Provision for loan losses		149		52		175		286			252
Net interest income after provision for loan losses		6,173		6,133		5,689		5,395			5,434
NONINTEREST INCOME
Service charges		113		118		124		115			119
Mortgage lending income		-		-		-		183			252
Steelhead finance income		1,185		1,181		1,202		1,192			1,224
BOLI Income		137		134		134		155			124
Other non-interest income		572		517		503		633			523
Total noninterest income		2,007		1,950		1,963		2,278			2,242
NONINTEREST EXPENSE
Salaries and employee benefits		3,220		3,374		3,374		3,804			3,332
Occupancy & equipment expense		800		906		881		899			902
Advertising expense		92		118		86		115			118
Professional expenses		175		260		234		206			194
Data processing expense		336		338		316		355			322
Loss on sale of investments		-		-		-		6,814			-
Other operating expenses		1,003		701		493		724			706
Total noninterest expense		5,626		5,697		5,384		12,917			5,574
Income before taxes		2,554		2,386		2,268		(5,244	)		2,102
Provision for income taxes		622		625		590		(1,338	)		544
NET INCOME	$	1,932	$	1,761	$	1,678	$	(3,906	)	$	1,558
Shares Outstanding End of Quarter		5,298,464		5,307,057		5,328,535		5,327,035			5,325,535
Average shares outstanding		5,304,193		5,321,376		5,328,035		5,326,035			5,325,535
Earnings per share	$	0.36	$	0.33	$	0.31	$	(0.73	)	$	0.29

(Dollars in 000's)	9/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023
Financial Highlights
Total portfolio loans	$	552,307		$	552,014		$	547,229		$	516,697		$	511,374
Total deposits	$	663,249		$	648,687		$	635,551		$	629,781		$	642,000
Total assets	$	787,129		$	788,037		$	788,750		$	763,277		$	811,116
Net income	$	1,932		$	1,761		$	1,678		$	(3,906	)	$	1,558
Performance Ratios
Return on average assets		0.97	%		0.90	%		0.85	%		-1.97	%		0.76	%
Return on average equity		9.26	%		8.90	%		8.60	%		-22.02	%		8.53	%
Net interest margin		3.51	%		3.49	%		3.31	%		3.19	%		3.07	%
Yield on loans		6.17	%		6.05	%		5.83	%		5.68	%		5.55	%
Cost of deposits		1.54	%		1.41	%		1.33	%		1.16	%		0.96	%
Efficiency ratio		67.55	%		70.03	%		68.79	%		162.29	%		70.31	%
Efficiency ratio excluding non-recurring expenses		67.55	%		70.03	%		68.79	%		72.40	%		70.31	%
Full-time equivalent employees		134			132			132			132			148
Capital
Tier 1 Capital Ratio		11.88	%		11.62	%		11.38	%		11.54	%		11.36	%
Community Bank Leverage Ratio		13.71	%		13.44	%		13.18	%		13.39	%		13.01	%
Book value per share	$	16.37		$	15.26		$	14.75		$	14.57		$	13.40
Tangible book value per share	$	15.67		$	14.56		$	14.05		$	13.86		$	12.70
Asset Quality
Allowance for loan losses (ALLL)	$	6,190		$	6,066		$	5,782		$	4,873		$	5,656
Nonperforming loans (NPLs)	$	2,225		$	1,127		$	412		$	733		$	427
Nonperforming assets (NPAs)	$	2,225		$	1,127		$	618		$	939		$	713
Classified assets^(2)	$	9,493		$	8,775		$	6,442		$	6,549		$	5,800
ALLL as a percentage of net loans		1.12	%		1.10	%		1.06	%		0.94	%		1.11	%
ALLL as a percentage of NPLs		278	%		538	%		1403	%		665	%		1325	%
Net charge offs (recoveries) to average loans		0.00	%		0.00	%		0.00	%		0.01	%		0.01	%
Net NPLs as a percentage of total loans		0.41	%		0.21	%		0.08	%		0.14	%		0.08	%
Nonperforming assets as a percentage of total assets		0.28	%		0.14	%		0.08	%		0.12	%		0.09	%
Classified Asset Ratio^(3)		10.21	%		10.08	%		7.61	%		7.85	%		7.53	%
Past due as a percentage of total loans		0.46	%		0.46	%		0.55	%		0.14	%		0.08	%
End of period balances
Total securities and short term deposits	$	160,579		$	160,446		$	161,904		$	167,355		$	216,673
Total loans, net of allowance	$	546,117		$	545,948		$	541,200		$	510,834		$	506,167
Total earning assets	$	712,886		$	712,460		$	709,133		$	684,052		$	728,496
Intangible Assets	$	3,717		$	3,729		$	3,741		$	3,753		$	3,766
Total assets	$	787,129		$	788,037		$	788,750		$	763,277		$	811,116
Total noninterest bearing deposits	$	275,838		$	269,634		$	256,558		$	272,945		$	292,230
Total deposits	$	663,249		$	648,687		$	635,551		$	629,781		$	642,000
Average balances
Total securities and short term deposits	$	170,092		$	159,413		$	165,584		$	201,788		$	241,049
Total loans, net of allowance	$	544,610		$	547,139		$	536,255		$	504,002		$	493,314
Total earning assets	$	714,702		$	706,552		$	701,839		$	705,790		$	734,363
Total assets	$	796,086		$	785,232		$	787,127		$	794,196		$	821,162
Total noninterest bearing deposits	$	266,179		$	254,771		$	255,204		$	273,413		$	291,470
Total deposits	$	670,056		$	647,351		$	642,420		$	643,015		$	657,331

^(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.