People’s Bank Reports 2021 Earnings

·14 min read

MEDFORD, Ore., January 19, 2022--(BUSINESS WIRE)--People’s Bank of Commerce (OTC PINK: PBCO) announced today its financial results for the 4th quarter and year-ended 2021.

Highlights

  • Fourth quarter net income of $3.0 million, or $0.59 per diluted share

  • Year-to-date net income of $11.5 million, or $2.44 per diluted share

  • Quarterly non-PPP loan growth rate of 13.1%, year-to-date loan growth of 68.8%

  • Fourth quarter tax equivalent net interest margin of 3.46%, excluding factoring revenue

  • Steelhead factoring revenue increased 60.1% over Q4 2020

People’s Bank reported quarterly net income of $3.0 million, or $0.59 per diluted share, for the 4th quarter of 2021 compared to net income of $1.7 million, or $0.45 per diluted share, in the same quarter of 2020. The bank recognized year-to-date net income of $11.5 million versus $6.1 million for the twelve months of 2020, an 87.1% increase from the prior year. Earnings per share for the trailing 12 months were $2.44 per share, up from $1.72 per share for the same period of 2020, a 41.9% increase. Fourth quarter income continued to be positively impacted by PPP fee income due to pro-ration of the remaining unamortized origination processing fees at payoff with $637 thousand in PPP fee income recognized during the quarter. Steelhead Finance also demonstrated solid revenue of $2.0 million during the quarter, versus $1.2 million in 4th quarter 2020. During the quarter, the bank made a provision for loan losses of $139 thousand. As anticipated with the bank’s recent acquisition of Willamette Community Bank (WMCB) in the 1st quarter 2021, the bank was able to achieve higher earnings per share than in previous periods.

During the quarter, deposits increased $13.6 million, or an annualized 7.2% growth rate. On an annual basis, deposits grew by $308 million, a 67.7% increase from December 31, 2020. Deposit growth during the year was attributed to several factors, including the bank’s acquisition of WMCB in the first quarter, the bank’s participation in the PPP loan program, and organic growth in all deposit markets. "We continue to see deposit growth, although at a slower pace than previous quarter. Our focus on building and sustaining relationships forged during the PPP push has allowed us to not only grow but retain core deposits," commented Joan Reukauf, Chief Operating Officer.

The Bank continued to deploy excess liquidity to the investment portfolio as an alternative to deposits at the Federal Reserve Bank. Through the end of the quarter, the bank increased its investment portfolio by $37.7 million, an 18.5% increase from the prior quarter.

Core portfolio loan growth, excluding PPP, totaled $14.3 million during the 4th quarter of 2021, representing an annualized growth rate of 13.1%. For the year 2021, the bank grew portfolio loans, excluding PPP, by $183.7 million, an overall annual growth rate of 68.8% when the impact of the WMCB merger is included. "During 2021, the bank achieved double-digit loan growth, in spite of the continued economic volatility from the COVID-19 pandemic and focus on the Willamette merger," commented Julia Beattie, President.

The bank’s active role in the Paycheck Protection Program (PPP) beginning in April 2020 resulted in 1,204 PPP loans in Round I, totaling $121.2 million, with all but 1 of the loans from Round I having been forgiven by December 31, 2021 (includes loans funded by WMCB prior to the bank merger with People’s Bank). Similarly, the bank funded 629 loans in Round II of the Paycheck Protection Program, representing $48.6 million in loan volume. By December 31, 2021, only $6.6 million in Round II loans had yet to be forgiven.

PPP Loan Activity To Date

As of

As of

As of

As of

(dollars in thousands)

12/31/2021*

9/30/2021*

6/30/2021*

3/31/2021*

#

$$$

#

$$$

#

$$$

#

$$$

PPP Loans Funded

Round One (2020 - Phase I & II)

1,204

$121,199

1,204

$121,199

1,204

$121,199

1,204

$121,199

Round Two (2021)

629

$ 48,588

629

$ 48,588

629

$ 48,588

534

$45,993

PPP Loans Forgiven

Round One (2020 - Phase I & II)

1203

$121,069

1196

$120,871

1139

$112,136

437

$65,540

Round Two (2021)

607

$ 42,168

465

$ 25,377

73

$3,190

-

$0

Net PPP Loans Outstanding

Round One (2020 - Phase I & II)

1

$130

8

$328

65

$9,063

767

$55,659

Round Two (2021)

22

$6,420

164

$23,211

557

$45,398

534

$45,993

Total Actual Balances outstanding

23

$6,550

172

$23,539

622

$54,461

1,301

$101,652

* Includes PPP activity of Willamette Community Bank

During the quarter, the bank experienced a decrease in classified assets. This was the result of a reduction of Other Real Estate Owned. Total loans past due or on non-accrual were flat from the prior quarter at 0.15%. During the 4th quarter, the Allowance for Loan and Lease Losses (ALLL) was updated based on new loan growth achieved during the quarter and updated economic expectations, which were factored into the bank’s analysis. As of December 31, 2021, the ALLL was 0.92% of portfolio loans excluding PPP and the unallocated reserve stood at $0.6 million or 14.6% of the allowance.

As of December 31, 2021, the bank’s Tier 1 Leverage Ratio was 8.99% versus 9.36% as of the same date in 2020, with total shareholder equity of $79.1 million. During the quarter, the bank was able to augment capital through earnings while assets also increased with our growth in deposits.

Fourth quarter 2021 non-interest income totaled $2.9 million, a decrease of $351 thousand from the 4th quarter of 2020. During the quarter, Steelhead Finance factoring revenue increased $745 thousand, a 60.1% increase over the same quarter of 2020. Conversely, mortgage income decreased $1.1 million, or a 71.1% from the 4th quarter of 2020. "The 4th quarter was the strongest on record for Steelhead Finance, we are extremely pleased with the division’s results during 2021," commented Ken Trautman, CEO. "Residential Mortgage lending was soft in the 4th quarter, but we have increased our focus in the Willamette region to continue diversifying our revenue streams bank-wide," added Trautman. During the year, the bank also updated its bargain purchase gain from the WMCB merger of $2.3 million to reflect the anticipated tax consequences, resulting in a reduction to other non-interest income of $317 thousand in both the third and fourth quarter of 2021.

Non-interest expense totaled $5.4 million in the 4th quarter, down $434 thousand from the 3rd quarter of 2021. During the 4th quarter, the bank reversed $425 thousand in one-time expense accruals from our recent merger, primarily the result of lower-than-expected deconversion costs from Willamette’s former data processing vendor. Included in 2021 non-interest expense is the final quarterly accrual of $250,000 for the bank’s $1 million donation to fire relief to assist with intermediate and long-term housing needs as our Southern Oregon community rebuilds. This is a non-recurring item for 2021. For the twelve months ending December 31, 2021, excluding one-time merger adjustments, earnings per share would have been $2.57, versus $1.72 for the same period ended December 31, 2020.

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 about the Bank is available in the investor section of the bank’s website at: www.peoplesbank.bank.

Founded in 1998, People’s Bank of Commerce is the only locally owned and managed community bank in Southern Oregon. People’s Bank of Commerce is a full-service, commercial bank headquartered in Medford, Oregon with branches in Albany, Medford, Ashland, Central Point, Grants Pass, Klamath Falls, Lebanon, 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.

(Dollars in 000's)

12/31/2021

9/30/2021

6/30/2021

12/31/2020

BALANCE SHEET

ASSETS

Cash and due from banks

$

5,194

$

4,561

$

4,752

$

2,819

Federal funds sold

-

-

-

-

Interest bearing deposits

77,643

100,429

148,554

91,103

Investment securities

241,564

203,913

104,155

25,894

Loans held for sale

1,408

2,802

901

3,407

Loans held for investment, net of unearned income

457,224

459,883

474,909

346,198

Total Loans, net of deferred fees and costs

458,632

462,685

475,810

349,605

Allowance for loan losses

(4,376

)

(4,302

)

(4,076

)

(4,453

)

Premises and equipment, net

27,304

27,567

26,878

21,624

Bank owned life insurance

13,759

13,689

13,585

7,476

Other Assets

39,877

37,070

36,316

29,263

Total assets

$

859,597

$

845,612

$

805,973

$

523,331

LIABILITIES

Deposits

Demand - non-interest bearing

$

350,424

$

358,013

$

317,837

$

231,095

Demand - interest bearing

113,154

100,341

112,945

54,806

Money market and savings

276,264

266,004

250,326

147,481

Time deposits of less than $250,000

21,140

22,670

20,613

19,149

Time deposits of more than $250,000

3,247

3,645

11,259

3,216

Total deposits

$

764,229

$

750,673

$

712,979

$

455,747

Borrowed funds

7,437

7,529

6,817

6,924

Other liabilities

8,866

9,887

11,107

7,824

Total liabilities

$

780,532

$

768,089

$

730,904

$

470,495

STOCKHOLDERS' EQUITY

Common stock

$

61,340

$

60,879

$

57,104

$

40,379

Retained earnings

19,465

16,489

17,620

11,775

Accumulated other comprehensive income,

net of tax

(1,740

)

155

345

682

Total stockholders' equity

$

79,065

$

77,523

$

75,069

$

52,836

Total liabilities & stockholders' equity

$

859,597

$

845,612

$

805,973

$

523,331

(Dollars in 000's)

4th Quarter 2021

3rd Quarter 2021

2nd Quarter 2021

4th Quarter 2020

INCOME STATEMENT

INTEREST INCOME

Loans

$

5,974

$

6,632

$

6,673

$

4,308

Investments

724

544

218

155

Federal funds sold and due from banks

44

58

50

30

Total interest income

6,742

7,234

6,941

4,493

INTEREST EXPENSE

Deposits

197

218

264

176

Borrowed funds

15

15

15

26

Total interest expense

212

233

279

202

NET INTEREST INCOME

6,530

7,001

6,662

4,291

Provision for loan losses

139

347

(249

)

182

Net interest income after provision for

loan losses

6,391

6,654

6,911

4,109

NONINTEREST INCOME

Service charges

117

106

108

57

Mortgage lending income

472

615

697

1,634

Steelhead finance income

1,984

1,785

1,587

1,239

Bargain purchase gain

(316

)

(316

)

-

-

BOLI Income

72

73

66

37

Other non-interest income

585

474

480

298

Total noninterest income

2,914

2,737

2,938

3,265

NONINTEREST EXPENSE

Salaries and employee benefits

3,416

3,354

3,389

3,186

Occupancy & equipment expense

924

893

800

590

Advertising expense

295

396

392

277

Professional expenses

213

561

353

406

Data processing expense

(197

)

324

333

242

Other operating expenses

699

256

682

356

Total noninterest expense

5,350

5,784

5,948

5,057

Income before taxes

3,955

3,608

3,901

2,317

Provision for income taxes

978

958

948

619

NET INCOME

$

2,977

$

2,650

$

2,953

$

1,698

Shares Outstanding End of Quarter

5,057,211

5,042,704

5,043,127

3,736,510

Average shares outstanding*

5,047,540

4,962,936

5,043,127

3,738,101

Earnings per share

$

0.59

$

0.53

$

0.59

$

0.45

*Adjusted for stock dividend 9/22/21

(Dollars in 000's)

12/31/2021

9/30/2021

6/30/2021

12/31/2020

Financial Highlights

Total loans

$

458,632

$

462,685

$

475,810

$

349,605

Total deposits

$

764,229

$

750,673

$

712,979

$

455,747

Total assets

$

859,597

$

845,612

$

805,973

$

523,331

Net income

$

2,977

$

2,650

$

2,953

$

1,698

Steelhead Finance contribution, pre-tax

$

1,116

$

1,089

$

970

$

531

Mortgage contribution, pre-tax

$

(8

)

$

212

$

308

$

751

Performance Ratios

Return on average assets

1.40

%

1.27

%

1.46

%

1.31

%

Return on average equity

15.32

%

13.79

%

16.05

%

13.10

%

Net interest margin

3.46

%

3.70

%

3.68

%

3.75

%

Yield on loans

5.15

%

5.53

%

5.39

%

4.66

%

Cost of deposits

0.10

%

0.12

%

0.15

%

0.16

%

Efficiency ratio

56.65

%

59.39

%

61.96

%

66.93

%

Full-time equivalent employees

140

140

138

106

Capital

Leverage ratio

8.99

%

8.73

%

8.83

%

9.36

%

Common equity tier 1 ratio

N/A(1)

N/A(1)

N/A(1)

N/A(1)

Tier 1 risk based ratio

N/A(1)

N/A(1)

N/A(1)

N/A(1)

Total risk based ratio

N/A(1)

N/A(1)

N/A(1)

N/A(1)

Book value per share

$

15.63

$

15.37

$

14.89

$

14.14

Tangible book value per share

$

14.87

$

14.61

$

14.11

$

13.21

Asset Quality

Allowance for loan losses (ALLL)

$

4,376

$

4,302

$

5,782

$

4,453

Nonperforming loans (NPLs)

$

703

$

665

$

876

$

191

Nonperforming assets (NPAs)

$

1,245

$

1,443

$

1,845

$

1,220

Classified assets(2)

$

2,949

$

3,275

$

3,138

$

2,550

ALLL as a percentage of net loans

0.96

%

0.94

%

1.23

%

1.29

%

ALLL as a percentage of NPLs

622

%

647

%

660

%

2327

%

Net charge offs (recoveries) to average loans

-0.15

%

0.03

%

0.00

%

0.00

%

Net NPLs as a percentage of total loans

0.15

%

0.15

%

0.19

%

0.06

%

Nonperforming assets as a percentage of total assets

0.14

%

0.17

%

0.23

%

0.23

%

Classified Asset Ratio(3)

3.53

%

4.00

%

3.96

%

4.45

%

Past due as a percentage of total loans

0.15

%

0.18

%

0.18

%

0.05

%

End of period balances

Total securities and short term deposits

$

319,207

$

304,342

$

252,709

$

116,997

Total loans, net of allowance

$

454,256

$

458,383

$

471,734

$

345,152

Total earning assets

$

777,839

$

767,027

$

728,520

$

466,602

Total assets

$

3,854

$

3,872

$

3,901

$

3,485

Total noninterest bearing deposits

$

859,597

$

845,612

$

805,973

$

523,331

Total deposits

$

350,424

$

358,013

$

317,837

$

231,095

764,229

750,673

712,979

455,747

Average balances

Total securities and short term deposits

Total loans, net of allowance

$

301,297

$

278,310

$

228,874

$

98,223

Total earning assets

$

449,826

$

465,410

$

489,813

$

361,982

Total assets

$

751,123

$

743,719

$

718,687

$

460,205

Total noninterest bearing deposits

$

848,239

$

834,485

$

809,623

$

517,187

Total deposits

$

356,832

$

336,375

$

320,986

$

227,689

752,255

739,372

717,147

448,225

(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 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.

(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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220119006117/en/

Contacts

Ken Trautman, CEO
(541) 774-7654, ken@peoplesbank.bank

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