People’s Bank Year-to-Date Earnings Increase 55%

People’s Bank of Commerce (OTCBB: PBCO) announced today its financial results for the second quarter and year-to-date 2018. The bank reported net income of $845,000 or $0.29 per basic and diluted share for the second quarter of 2018, compared to net income of $483,000 or $0.20 per share in the same quarter of 2017. Earnings for the first six months of 2018 totaled $1,569,000 or $0.56 per share compared to $1,011,000 or $0.43 per share during the first half of 2017. Diluted earnings per share for the trailing 12 months ending 6/30/2018 were $0.97 per share compared to $0.92 one year earlier.

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

• Total Loans increased 15%
• Total Deposits increased 14%
• Total Assets increased 16%
• Total Equity increased 22%

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

• Net-interest Income increased 9%
• Pre-tax income increased 34%
• Non-interest Income increased 257%
• Non-interest Expense increased 46%

President’s Comments

"Total loans and deposits showed strong increases in the first half of 2018 as noted above,” stated Ken Trautman, bank President and CEO. "Our pipeline of approved but not yet funded loans is at the highest level in the bank’s history, which positions us well for the last half of this year. The recent increases in interest rates has been expected for some time and will steadily increase our cost of funds. The bank has been fortunate to have large non-interest demand deposit balances, about 46% of total deposits, which have lessened the impact of rising interest rates. Increasing local and national competition for deposits could impact the bank’s net interest margin.”

Provision for Credit Losses

Mr. Trautman continued, "With total loans increasing over 12% during first 6 months of this year, our provision for loan and lease losses has increased to $224 thousand compared to a decrease of $6 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 June 2018 compared to $71 thousand of non-accrual in 2017. At the end of the second quarter 2018, the loan loss reserve was 1.126% of loans held for investment compared to 1.15% at the end of the second quarter 2017.

Non-Interest Income

For the quarter ending June 30, 2018, non-interest income was $1.8 million compared to $429 thousand in the same quarter one year earlier. For the first half of 2018, non-interest income was higher than the previous year with $3.4 million compared to $949 thousand year-to-date in 2017. The bank’s wholly owned subsidiary Steelhead Finance, LLC generated $2.4 million in non-interest income during the first half of 2018.

Non-Interest Expense

For the quarter ending June 30, 2018, non-interest expense was $3.6 million compared to $2.4 million in 2017. Year-to-date non-interest expense totaled $6.9 million through June 30, 2018, compared to $4.7 million in the same period the prior year. Mr. Trautman explained, "Two significant items impacted non-interest expense during 2018, the first is the salary expense associated with the Steelhead Finance purchase and the second is the salary and overhead expense associated with the bank’s expansion into the Klamath Falls market.”

Capital

As of June 30, 2018, shareholder’s equity totaled $33 million, compared to $27.2 million at June 30, 2017. The bank’s leverage ratio was 10.1% at the end of the second quarter 2017, compared to 9.6% one year ago. Book value per share was $11.37 on June 30, 2018, compared to $10.80 on June 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.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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