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.