People’s Bank Reports Earnings

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.

People’s Bank of Commerce
President and CEO
Ken Trautman, 541-774-7654