PBCO Financial Corporation Reports Q3 2023 Earnings

PBCO Financial Corporation (OTCPK: “PBCO”), the holding company (Company) of People’s Bank of Commerce (Bank), today reported earnings of $1.56 million and earnings per diluted share of $0.29 for the quarter ended September 30, 2023, compared to $1.66 million and $0.31 per diluted share for the quarter ended June 30, 2023.

Highlights

• Portfolio loans increased 7.7% year-to-date
• Credit quality remains strong with non-performing assets to total assets of 0.09%
• Total non-interest expense declined 9.0% during the quarter from expense containment efforts

“Third quarter loan growth outpaced the prior two quarters, with a concerted effort toward high quality loan growth within the bank’s markets, especially the new Eugene branch that opened in March 2023,” reported Julia Beattie, President and Chief Executive Officer. Loans increased $21.0 million in the quarter, or 4.28%, compared to the second quarter of 2023. “In spite of higher borrowing costs, we continued to experience strong demand for loans through the end of the quarter,” added Beattie.

Non-performing assets continued to improve in the third quarter to 0.09%, as a percentage of total assets, versus 0.12% in the second quarter 2023. During the third quarter, the Allowance for Credit Losses increased by $252 thousand, primarily the result of strong loan growth over the prior quarter.

Deposits decreased $8.6 million during the quarter, a 1.3% decline from the second quarter of 2023. “Deposits continued to contract during the quarter, given continued pressure on interest rates, although at a slower pace than experienced over the prior three quarters,” commented Beattie. “The bank has focused on retaining core deposits while acknowledging that the pressure on rates has added to margin compression within the Bank,” continued Beattie. Funding costs increased over the prior quarter as a result of rising deposit rates and borrowing expenses related to the advance from the Bank Term Funding Program taken at the end of second quarter, which resulted in the incremental borrowed funds interest expense of $477 thousand in the third quarter.

The investment portfolio decreased 8.8% to $200.9 million in third quarter of 2023 from $220.4 million at the end of the second quarter 2023. This decrease is the result of maturing investments being reinvested in loan growth. The average life of the portfolio was 4.5 years at the end of the third quarter. Securities income was $0.88 million during the quarter, a yield of 1.66%, versus $0.97 million, and a yield of 1.76% for the second quarter of 2023. As of September 30, 2023, the net after tax unrealized loss on the investment portfolio was $24.1 million versus $21.3 million as of June 30, 2023, due to increased market rates. Highly rated government agency and government sponsored agency investments comprise 94.5% of the investment portfolio with the balance of approximately 4.6% held in municipal investments and 0.9% held in corporate sub-debt issued by community banks. As of third quarter 2023, liquid assets to total assets were 14.8%, including the market value of the investment portfolio less pledged investments.

Third quarter 2023 non-interest income totaled $2.2 million, a decrease of $118 thousand from the second quarter of 2023. The slight decrease was primarily driven by a reduction in factoring revenue from Steelhead Finance, which declined by 5.2%, or $67 thousand, from the prior quarter. “Our factoring division has experienced the effects of the current economic conditions on the transportation industry. Factoring volumes for the industry nationwide are down approximately 33% from last year’s average,” reported Bill Stewart, President of Steelhead Finance. Mortgage revenue was down $23 thousand in the quarter, demonstrating continued reduction in mortgage demand attributed to elevated rates.

Non-interest expenses totaled $5.6 million in the third quarter, down $548 thousand from the previous quarter. The reduction in expenses was the result of a decrease in personnel expense of $658 thousand versus second quarter due to expense containment efforts, a 16.5% decrease.

As of September 30, 2023, the Tier 1 Capital Ratio for PBCO Financial Corporation was 11.36% with total shareholder equity of $71.4 million. During the quarter, the Company continued to augment capital through earnings. The Tier 1 Capital Ratio for the Bank was 13.01% at quarter-end, up from 12.78% as of June 30, 2023. Tangible Capital was $67.6 million, or 8.34% as of September 30, 2023, versus second quarter of 2023 at $68.8 million or 8.47%.

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)		9/30/2023			6/30/2023			3/31/2023			12/31/2022			9/30/2022
BALANCE SHEET
ASSETS
Cash and due from banks		$	4,502		$	6,021		$	5,097		$	5,514		$	14,888
Federal funds sold			-			-			-			-			-
Interest bearing deposits			15,732			20,469			8,224			10,869			55,770
Investment securities			200,941			220,430			234,647			236,284			246,533
Loans held for sale			449			1,863			299			628			894
Loans held for investment, net of unearned income			511,374			490,378			488,025			475,024			447,725
Total Loans, net of deferred fees and costs			511,823			492,241			488,324			475,652			448,619
Allowance for loan losses			(5,656	)		(5,424	)		(5,508	)		(5,190	)		(4,842	)
Premises and equipment, net			30,334			27,352			27,659			27,888			27,286
Bank owned life insurance			16,479			16,322			16,210			14,179			14,090
Other Assets			36,961			35,470			36,450			38,098			41,173
Total assets		$	811,116		$	812,881		$	811,103		$	803,294		$	843,517
LIABILITIES
Deposits
Demand - non-interest bearing		$	292,230		$	291,981		$	299,535		$	322,809		$	343,708
Demand - interest bearing			131,603			115,844			123,494			108,972			111,184
Money market and savings			187,952			213,715			222,834			244,282			265,628
Time deposits of less than $250,000			20,530			21,017			19,579			12,626			13,878
Time deposits of more than $250,000			9,685			8,078			8,236			4,106			4,183
Total deposits		$	642,000		$	650,635		$	673,678		$	692,795		$	738,581
Borrowed funds			86,190			79,276			54,860			34,449			31,604
Other liabilities			11,545			10,349			9,013			7,639			8,320
Total liabilities		$	739,735		$	740,260		$	737,551		$	734,883		$	778,505
STOCKHOLDERS' EQUITY
Common stock, surplus & retained earnings		$	95,516		$	93,959		$	92,433		$	91,133		$	88,660
Accumulated other comprehensive income, net of tax			(24,135	)		(21,338	)		(18,881	)		(22,722	)		(23,648	)
Total stockholders' equity		$	71,381		$	72,621		$	73,552		$	68,411		$	65,012
Total liabilities & stockholders' equity		$	811,116		$	812,881		$	811,103		$	803,294		$	843,517

Consolidated Statements of Income
(Dollars in 000's)		3rd Quarter 2023			2nd Quarter 2023			1st Quarter 2023			4th Quarter 2022			3rd Quarter 2022
INCOME STATEMENT
INTEREST INCOME
Loans		$	7,071		$	6,757		$	6,350		$	6,042		$	5,744
Investments			880			970			1,035			1,057			979
Federal funds sold and due from banks			312			113			61			366			406
Total interest income			8,263			7,840			7,446			7,465			7,129
INTEREST EXPENSE
Deposits			1,580			1,418			746			281			244
Borrowed funds			997			520			382			276			276
Total interest expense			2,577			1,938			1,128			557			520
NET INTEREST INCOME			5,686			5,902			6,318			6,908			6,609
Provision for loan losses			252			(86	)		57			403			153
Net interest income after provision for loan losses			5,434			5,988			6,261			6,505			6,456
NONINTEREST INCOME
Service charges			119			124			119			122			132
Mortgage lending income			252			275			59			146			282
Steelhead finance income			1,224			1,291			1,465			1,555			1,896
BOLI Income			124			112			108			87			101
Other non-interest income			523			558			426			489			571
Total noninterest income			2,242			2,360			2,177			2,399			2,982
NONINTEREST EXPENSE
Salaries and employee benefits			3,332			3,990			4,000			3,868			3,317
Occupancy & equipment expense			902			875			877			690			841
Advertising expense			118			121			119			113			118
Professional expenses			194			205			214			358			184
Data processing expense			322			317			321			446			262
Other operating expenses			706			614			674			676			730
Total noninterest expense			5,574			6,122			6,205			6,151			5,452
Income before taxes			2,102			2,226			2,233			2,753			3,986
Provision for income taxes			544			571			560			733			992
NET INCOME		$	1,558		$	1,655		$	1,673		$	2,020		$	2,994
Shares Outstanding End of Quarter			5,325,535			5,325,535			5,325,535			5,325,035			5,313,424
Average shares outstanding			5,325,535			5,325,368			5,317,065			5,317,065			5,312,025
Earnings per share		$	0.29		$	0.31		$	0.31		$	0.38		$	0.56
(Dollars in 000's)		9/30/2023			6/30/2023			3/31/2023			12/31/2022			9/30/2022
Financial Highlights
Total portfolio loans		$	511,374		$	490,378		$	488,025		$	475,024		$	447,725
Total deposits		$	642,000		$	650,635		$	673,678		$	692,795		$	738,581
Total assets		$	811,116		$	812,881		$	811,103		$	803,294		$	843,517
Net income		$	1,558		$	1,655		$	1,673		$	2,020		$	2,994
Steelhead Finance contribution, pre-tax		$	323		$	450		$	481		$	454		$	820
Mortgage contribution, pre-tax		$	(162	)	$	(164	)	$	(259	)	$	(111	)	$	(17	)
Performance Ratios
Return on average assets			0.76	%		0.82	%		0.83	%		0.98	%		1.38	%
Return on average equity			8.53	%		9.06	%		9.48	%		12.34	%		17.41	%
Net interest margin			3.07	%		3.22	%		3.49	%		3.74	%		3.40	%
Yield on loans			5.48	%		5.46	%		5.36	%		5.34	%		5.15	%
Cost of deposits			0.96	%		0.84	%		0.44	%		0.16	%		0.13	%
Efficiency ratio			70.31	%		74.10	%		73.04	%		66.09	%		56.84	%
Full-time equivalent employees			148			142			146			146			143
Capital
Leverage ratio			11.36	%		11.15	%		10.98	%		10.92	%		10.10	%
Community Bank Leverage Ratio			13.01	%		12.78	%		12.60	%		12.55	%		12.84	%
Book value per share		$	13.40		$	13.64		$	13.81		$	12.85		$	12.24
Tangible book value per share		$	12.70		$	12.93		$	13.10		$	12.13		$	11.52
Asset Quality
Allowance for loan losses (ALLL)		$	5,656		$	5,424		$	5,782		$	4,873		$	4,842
Nonperforming loans (NPLs)		$	427		$	677		$	1,280		$	2,653		$	1,684
Nonperforming assets (NPAs)		$	713		$	963		$	1,566		$	2,939		$	1,970
Classified assets(2)		$	5,800		$	5,964		$	6,984		$	5,132		$	1,843
ALLL as a percentage of net loans			1.11	%		1.10	%		1.18	%		1.02	%		1.08	%
ALLL as a percentage of NPLs			1325	%		801	%		452	%		184	%		288	%
Net charge offs (recoveries) to average loans			0.01	%		0.00	%		0.00	%		0.03	%		0.02	%
Net NPLs as a percentage of total loans			0.08	%		0.14	%		0.27	%		0.56	%		0.38	%
Nonperforming assets as a percentage of total assets			0.09	%		0.12	%		0.19	%		0.37	%		0.23	%
Classified Asset Ratio(3)			7.53	%		7.64	%		8.83	%		6.97	%		2.64	%
Past due as a percentage of total loans			0.08	%		0.14	%		0.26	%		0.56	%		0.38	%
End of period balances
Total securities and short term deposits		$	216,673		$	240,899		$	242,871		$	247,153		$	302,303
Total loans, net of allowance		$	506,167		$	486,817		$	482,816		$	470,462		$	443,777
Total earning assets		$	728,496		$	733,140		$	731,195		$	722,805		$	750,922
Intangible Assets		$	3,766		$	3,778		$	3,790		$	3,802		$	3,815
Total assets		$	811,116		$	812,881		$	811,103		$	803,294		$	843,517
Total noninterest bearing deposits		$	292,230		$	291,981		$	299,535		$	322,809		$	343,708
Total deposits		$	642,000		$	650,635		$	673,678		$	692,795		$	738,581
Average balances
Total securities and short term deposits		$	241,049		$	242,315		$	245,101		$	280,254		$	324,448
Total loans, net of allowance		$	493,314		$	489,624		$	473,919		$	452,921		$	445,852
Total earning assets		$	734,363		$	731,939		$	719,020		$	733,175		$	770,301
Total assets		$	821,162		$	811,697		$	803,116		$	828,608		$	866,319
Total noninterest bearing deposits		$	291,470		$	293,331		$	318,548		$	338,418		$	344,623
Total deposits		$	657,331		$	675,579		$	685,318		$	722,840		$	756,539

(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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The PBCO Financial Registered Stock at the time of publication of the news with a raise of 0,00 % to 12,25USD on Nasdaq OTC stock exchange (25. Oktober 2023, 02:10 Uhr).