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.

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