PBCO PBCO Financial Corporation (PK)

People’s Bank of Commerce (OTCBB:PBCO) today reported modest earnings for the third quarter of 2009 of $48,000, a substantial improvement from the $534,000 loss reported in the previous quarter. These earnings are also favorable compared to the $7,000 loss in the same quarter of 2008. The bank reported earnings of $0.05 per share for the three months ended September 30, 2009 compared to the loss of one cent per share in 2008.

Through the first nine months of 2009, People’s Bank had a net loss of $434,000 compared to a profit of $73,000 for the same period in 2008. On a per share basis, a loss of $0.48 per share in 2009 is compared to $0.08 in 2008. Year to date 2009 results are tempered by the large additions the bank made to its loan loss reserve totaling $1,110,500 compared to $105,000 the same period in 2008. The bank continues to closely monitor its loan loss reserve for adequacy; the bank has increased its reserve ratio from 1.22% of portfolio loans in 2008 to 1.62% of portfolio loans this year.

Ken Trautman, People’s Bank President and CEO explained that third quarter earnings were again positive. Although small, they reflect the positive changes in the bank’s balance sheet and key ratios. The Bank benefited from significant loan and deposit increases this year. Total portfolio loans increased 11% to $74.9 million in the past 12 months as of September 30, 2009 while deposits are up in the same period by 26% to $91,374,000. At the end of the third quarter of 2009 the bank’s loan to deposit ratio stood at 82% compared to 93% in 2008. Trautman explained, “The change in loan to deposit ratio increases liquidity and in uncertain times additional liquidity increases the bank’s safety.”

Net interest income remained steady in the third quarter of 2009, with the net interest margin at 4.53% through September 30, 2009 compared to 4.78% in 2008. “While the net interest margin has decreased slightly, it is still strong compared to other banks.” Trautman noted. “It is the higher loan loss provisions that have reduced profitability.” Non-interest income was up 44% for the third quarter of 2009 compared to the same period in 2008 primarily a reflection of the outstanding performance of our residential lending department which showed a 53% increase in home lending activity.

The bank’s Board of Directors recently made the decision to suspend its quarterly dividend to preserve capital. “Even though the bank’s capital is extremely strong at over 10% equity, the board felt it prudent based on the robust level of asset growth we have experienced and the extreme economic uncertainty, that the shareholders are better served keeping the capital in the bank until more normal economic times return.”

The bank’s has total shareholders’ equity of over $10.8 million and a book value of $11.91 per share. The stock trades in the OTC Bulletin Board market under the symbol PBCO.

2009   2008  

Quarter ended September 30:

Net income (loss) $ 48,000 $ (7,000) EPS 0.05 (0.01)  

Quarter ended June 30:

Net income (loss) $ (534,000) $ 3,500 EPS (0.59) 0.004  

Nine months end September 30:

Net income (loss) $ (434,000) $ 73,000 EPS (0.48) 0.08  

At September 30:

Total Portfolio Loans $ 74,886,000 $ 67,417,000 Total Reserve for Loan Losses 1,215,000 821,000 Total Deposits 91,374,000 72,606,000 Total Assets 103,402,000 84,462,000 Total Shareholders' Equity 10,844,000 11,391,000 No. of shares outstanding 910,176 910,176 * Book Value, per share 11.91 12.52 *  

At June 30:

Total Portfolio Loans $ 73,021,000 $ 67,412,000 Total Reserve for Loan Losses 1,209,000 822,000 Total Deposits 84,966,000 68,103,000 Total Assets 96,889,000 84,573,000 Total Shareholders' Equity 10,717,000 11,487,000 No. of shares outstanding 910,176 910,176 * Book Value, per share 11.77 12.62

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* 2008 data adjusted retroactively for stock dividend paid 4/16/09.