Market Overview

People's Bank Reports 13 Consecutive Quarters of Profitability


People's Bank of Commerce (OTCBB: PBCO) today reported earnings of $676,000 for the first nine months of 2012, up 114% over the $315,000 for the same period last year. This resulted in earnings of $0.57 per share for the first nine months of 2012, compared to $0.27 per share reported the prior year. Net interest income was up by 16% year-to-date, the result of strong loan growth during 2012. The Bank is also excited to report the opening of its Barnett Road branch in mid-November 2012.

“The first nine months of 2012 produced the best net profit we've had in the past five years and marks the Bank's 13th consecutive quarter of profitability since the recession hit,” said Ken Trautman, president and CEO of People's Bank.

“Strong loan and deposit growth continues in excess of 14%, as local businesses refinance with People's Bank to take advantage of the extremely low long-term rates. The bank's excellent profit, due in large part to its tremendous development in commercial lending, showcases its commitment to lend local deposits to local businesses,” added Trautman.

Earnings for the third quarter of 2012 were $252,000, compared to $155,000 for the same period in 2011, an increase of 62%. The Bank reported earnings of $0.21 per share for the three months ending September 30, 2012, compared to $0.13 per share in 2011. Mortgage lending income for the current three month period was $413,000, up 185% over the same period last year. Non-interest income was also 36% higher during the third quarter of 2012, compared to the third quarter of 2011. Non-interest expenses showed an increase of 19% over the same period last year, due primarily to salaries of added personnel to support the Bank's strong growth.

For the first three quarters, non-interest income was up 50%, compared to 2011, primarily due to the increase in mortgage lending activity, reflective of the improved local residential real estate market. Non-interest expense for the nine month period ending September 30, 2012 was up 14% over the prior year.

“It is very satisfying to report significant mortgage lending income, which reflects an energized local residential real estate market,” said Trautman. “This is in stark contrast to last year's report of ‘reduced mortgage lending income, reflective of a slow residential real estate market.'”

The Bank's loan quality continues to excel with non-current loans to total loans at 0.09% as of September 30, 2012, down from 0.27% last year. Non-performing assets to total assets compares loans past due 90 days and more, loans on non-accrual and other real estate owned to total assets. This ratio was 1.39% as of September 30, 2012, compared to 2.44% at the end of September 2011. Reserves totaled 1.62% of total loans at the end of the third quarter 2012, compared to 1.61% one year ago. The loan loss provision totaled $242,000 for the first nine months of 2012, compared to $258,000 for the first nine months of 2011.

People's Bank reported total assets of $137 million at the end of September 2012, up 16% from the prior year. The Bank has total shareholders' equity of $14.4 million and a book value of $12.04 per share. Tier one capital to average assets remains strong at 10.3%, considerably above regulatory guidelines for a well-capitalized bank. The Bank's stock trades on the over-the-counter market under the symbol PBCO.




Quarter ended September 30:

Net interest income $ 1,437,000 $ 1,245,000
Provision for Loan Losses 114,000 163,000
Noninterest income 699,000 514,000
Noninterest expense 1,646,000 1,380,000
Net income 252,000 155,000
EPS 0.21 0.13 **

Year to Date

Net Interest income $ 4,085,000 $ 3,534,000
Provision for Loan Losses 242,000 258,000
Noninterest income 1,792,000 1,194,000
Noninterest expense 4,637,000 4,075,000
Net income 676,000 315,000
EPS 0.57 0.27 **

At September 30:

Total Portfolio Loans $ 105,104,000 $ 92,081,000
Total Reserve for Loan Losses 1,750,000 1,525,000
Total Deposits 120,767,000 100,141,000
Total Assets 137,060,000 118,199,000
Total Shareholders' Equity 14,384,000 13,352,000
No. of shares outstanding 1,194,253 1,179,262 **
Book Value, per share 12.04 11.32
** Retroactively adjusted for 2012 stock dividend

"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.

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

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