PBCO Financial Corporation Reports Q3 2023 Earnings
MEDFORD, Ore., October 25, 2023--(BUSINESS WIRE)--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. | |||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20231025400505/en/
Contacts
Julia Beattie, President & CEO
(541) 608-8920, julia.beattie@peoplesbank.bank
