People’s Bank Year-to-Date Earnings Increase 48%

People’s Bank of Commerce (OTCBB: PBCO) announced today its financial results for the third quarter and year-to-date 2018. The bank reported net income of $948,000 or $0.33 per basic and diluted share for the third quarter of 2018, compared to net income of $695,000 or $0.26 per share in the same quarter of 2017. Earnings for the first nine months of 2018 totaled $2,516,000 or $0.88 per share compared to $1,706,000 or $0.69 per share during the first three quarters of 2017. Earnings per share for the trailing 12 months ending September 30, 2018 were $1.00 per share compared to $0.95 during the same period one year earlier.

Balance Sheet September 30, 2018 vs. September 30, 2017:

• Total Loans increased 19%
• Total Deposits increased 12%
• Total Assets increased 12%
• Total Equity increased 11%

Income Statement year-to-date September 30, 2018 vs. September 30, 2017:

• Net-interest Income increased 11%
• Pre-tax income increased 27%
• Non-interest Income increased 191%
• Non-interest Expense increased 45%
• Return on average assets 1.04% vs. 0.82%
• Return on average equity 10.31% vs. 8.29%

President’s Comments

"Total loans and deposits continue to show strong increases over the past 12 months,” stated Ken Trautman, bank President and CEO. "The bank’s subsidiary, Steelhead Finance, acquired in September 2017, continues to perform at a very high level. The bank’s pipeline of pending loans is currently equal to about 24% of loans outstanding with about 50% of the pipeline approved, but not yet funded. The bank has hired a new, highly experienced, four person lending team to increase loan production further. The disruption in our market place from strategic changes within the regional and national banks continue to provide People’s Bank with opportunities for an increased market share,” commented Trautman.

Provision for Credit Losses

As a result of strong loan growth, the bank’s provision for loan and lease losses has increased by $293 thousand compared to a year-to-date decrease of $20 thousand during the same period last year. Credit quality remains strong with no loans past due over 90 days or on non-accrual at the end of September 2018 and September 2017. At the end of the third quarter 2018, the loan loss reserve was 1.12% of loans held for investment compared to 1.15% at the end of the third quarter 2017.

Non-Interest Income

For the quarter ending September 30, 2018, non-interest income was $1.7 million compared to $814 thousand in the same quarter one year earlier. For the first three quarters of 2018, non-interest income was higher than the previous year with $5.1 million compared to $1.8 million year-to-date in 2017. The bank’s wholly owned subsidiary Steelhead Finance, LLC generated $3.7 million in non-interest income during the three quarters of 2018.

Non-Interest Expense

For the quarter ending September 30, 2018, non-interest expense was $3.6 million compared to $2.5 million in the same quarter of 2017. Year-to-date non-interest expense totaled $10.5 million through September 30, 2018, compared to $7.2 million in the same period the prior year. Mr. Trautman explained, "The most significant factors causing the increase were the added non-interest expense associated with Steelhead, the bank’s expansion into the Klamath Falls market, and third, the bank’s additional lending team.

Capital

As of September 30, 2018, shareholder’s equity totaled $34.0 million, compared to $30.6 million at September 30, 2017. The bank’s leverage ratio was 10.1% at the end of the third quarter 2018, compared to 10.2% one year ago. Book value per share was $11.68 on September 30, 2018, compared to $10.72 on September 30, 2017, when adjusted for the 5% stock dividend received in May of 2018.

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.peoplesbank.bank.

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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