People’s Bank of Commerce Earnings Increase 37%

People’s Bank of Commerce (OTCBB: PBCO) announced today its financial results for the first quarter of 2018. The bank reported net income of $724,000 or $0.26 per diluted share for the first quarter of 2018, compared to net income of $528,000 or $0.23 per diluted share in the same quarter of 2017. Earnings in the fourth quarter of 2017 totaled $313,000 or $0.11 per diluted share. Earnings per share for the trailing 12 months, was $0.86 per share at the end of the first quarter 2018 from $0.93 per share for the prior period. Fourth quarter 2017 earnings were impacted by the one-time tax charge associated with the tax law revision of $413,000 or $0.15 per share.

Highlights for the quarter compared to the first quarter of 2017:

• Net loans increased 10%.
• Deposits increased 16%
• The bank’s total assets increased 17%.
• Net interest income increased by 9%.
• Non-Interest income increased 198%.
• Non-interest expense increased 41%

President’s Comments

"The bank is seeing an increase in the number and size of requests for commercial loans, indicative of the strength of the local economy and the optimism of our business owners. This optimism was greatly assisted by the recently passed tax cuts that benefited a large majority of our customers. The net interest margin for the first quarter of 2018 was 4.35% compared to 4.33% for the same quarter of 2017. The efficiency ratio was 73.46% for the 12 months ending 3/31/18 from 72.28% for the 12 months ending 3/31/2017,” said Ken Trautman, President and CEO.

Provision for Credit Losses

Loan quality continues to be strong and loans outstanding are growing at a year-to-date annualized rate of over 20%. This growth resulted in an increase to the allowance for loan losses of $122,000, compared to a reduction in the allowance of $36,000 in the same quarter last year. The addition in 2018 was due to a 5% increase in loans outstanding during the quarter. "The bank anticipates continued additions to the allowance for loan and lease losses during 2018 due to anticipated loan growth,” commented Mr. Trautman.

Non-Interest Income

Non-interest income for the first quarter of 2018 was $1,547,000 compared to $519,000 for the same quarter of 2017, an increase of 198%. This increase was primarily driven by income generated by the Bank’s wholly owned subsidiary, Steelhead Finance, which provided $1,085,000 in revenue. Mortgage income for the 1^st quarter of 2018 was down $64,000 when compared to the 1^st quarter of 2017 on reduced volume.

Non-Interest Expense

Non-interest expense for the first quarter of 2018 was $3,286,000 compared to $2,330,000 for the same quarter of 2017, an increase of 41% driven primarily by salary and benefit increases associated with the Steelhead Finance purchase in September of 2017. The Bank also opened a full service branch in Klamath Falls during the first quarter of 2018 which increased non-interest expenses in all categories.

Capital

At March 31, 2018, shareholder equity totaled $32.0 million, compared to $26.6 million at March 31, 2017. The bank’s leverage ratio was 10.0% at the end of the first quarter 2018, compared to 9.8% one year ago. Book value per share was $11.65 on March 31, 2018, compared to $11.67 on March 31, 2017, when adjusted for the 5% stock dividend received in May of 2017.

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.peoplesbankofcommerce.com.

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 bank headquartered in Medford, Oregon with branches in Medford, Ashland, Central Point, Grants Pass and Klamath Falls.

"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.

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