PBCO FINANCIAL CORPORATION 2023
YEAR IN REVIEW
Dear Shareholder,
The Board of Directors of PBCO Financial Corporation, the holding company for People's Bank of Commerce, is pleased to report our 2023 annual results and accomplishments.
With this being my first letter to you as the CEO, I want to begin by saying what an honor it was to step into the role when Ken Trautman retired in July. Ken was at the helm for the past 15 years. Through his vision and with his great leadership, the organization grew into what it is today. I plan to build on that success and am excited to do so with the support
of a very talented senior management team.
2023 was an interesting year. We started the year in the midst of a rising rate environment as the Federal Reserve continued to fight inflation. The rate increases, which began in March 2022, would become the steepest rate increase in history with 11 rate hikes in just 16 months totaling 500 basis points. These rate increases caused some of our deposit account holders to seek other alternatives for higher returns, compressed our net interest margin, and strained our bank investment portfolio with unrealized book losses. Further, the increased rates put a substantial damper on home mortgage activity that negatively impacted the bank's earnings for the year. And finally, the increasing rate environment, continued labor shortages, and ongoing supply chain challenges were causal factors to a notable reduction in revenue contribution from our factoring division, Steelhead Finance.
While these were big challenges, the bank managed through 2023 quite well. We opened a new full-service branch (our 11th branch) in Eugene allowing the lending team, hired in November 2022, the opportunity to bring full relationships to the bank. And while we continued to see some deposit run-off during the year, the pace slowed throughout the year. Furthermore, we ended the year with almost 9% loan growth with the new loans booked at strong rates more than commensurate with our increased cost of funds.
During 2023, management kept a laser focus on positioning the bank for a strong entry into 2024. To that end, we made two notable decisions during the 4th quarter: the first being the dissolution of our mortgage lending division and the second a partial liquidation of our investment portfolio. Press releases were provided when each of these actions were executed. These strategic decisions were made to capitalize on our core strength as a provider of commercial banking services and to redeploy resources into higher earning opportunities. Excluding one-time expenses associated with these strategic moves, the bank would have attained a net profit of $6.3 million for the year, an ROAA of .78% and an ROAE of 8.76% (versus reported net profit of $979 thousand, .12% ROAA and 1.36% ROAE). Furthermore, these strategic moves were made while maintaining our well-capitalized status with Tier 1 Capital of 11.54%.
We are excited about our opportunity in 2024. Our capital position remains strong, we have a strong and growing market presence in southern Oregon and a fast-growing market presence in the Willamette Valley, and we have a terrific team of bankers. We will continue to focus on ensuring that we are providing the scope of products and services needed to support our local businesses while at the same time exercising expense discipline to improve overall operating performance, ultimately leading to increased value to our shareholders.
Please don't hesitate to contact me directly at 541-608-8920 if you have any questions or comments.
Sincerely,
Julia B. Beattie
President & Chief Executive Officer
"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.
OUTREACH
Giving back to communities is a fundamental value of community banking. People's Bank puts a high priority on ensuring we are not only active in our communities, but that we also support local organizations that help our communities. One of the means by which we do this is through financial grants from our bank foundation. People's Bank of Commerce Foundation, founded in 2019, has a distinct Mission Statement - Work to improve and maintain the quality of life in the communities currently served by People's Bank. In 2023, there were two notable recipients of grant funding.
The Asante Foundation is committed to transforming the quality and scope of health care in southern
Oregon, working with the community to meet the growing needs of the region. The bank's foundation is a proud supporter of Asante Forward with a multi-year donation resulting in an overall commitment of $100,000.
In 2023, we were especially pleased to support the construction of Courtney Place, a much-needed affordable housing complex for veterans in downtown Salem. Through
the bank's foundation, we donated $100,000 to the Salem YMCA Veterans Housing Courtney Place in support of their capital campaign.
KEN'S RETIREMENT
July 1, 2023 marked another important date for People's Bank of Commerce as we saw our co-founder and CEO, Ken Trautman retire. Over the last 40 years, Trautman has made an indelible mark not only in southern Oregon banking, but the entire banking industry statewide. In 1998, Trautman, along with the late Mike Sickels, started People's Bank of Commerce, an institution that can attribute its growth and success in large part to his leadership, tenacity, and courage. Under Ken's leadership, the bank has grown from seven employees in a single Medford location to over 140 employees with 11 offices serving ten communities.
Trautman isn't only known for his leadership at the bank. His leadership in the community, along with his entrepreneurial spirit, has contributed to many community boards, organizations, and businesses in southern Oregon. Over the years, Trautman has served on numerous boards including the Asante Health System Board, Britt Festival Board, and the Jackson County Fair Board. He was the recipient of the 2020 Southern Oregon Business Award for his tireless efforts and support of local businesses in ensuring they had access to much needed funds during the pandemic and support of the southern Oregon community in the wake of the devastating fires.
Trautman is also recognized as a leader in the Oregon banking community, serving on the Oregon Banking Association Board of Directors, ultimately leading the board as chairman and then moving on to chair the Community Banks of Oregon. "Not only has Ken founded and run a very successful
community bank, he has been an exemplary contributor to the industry as a whole," said OBA President and CEO Linda Navarro. "He volunteered his leadership at OBA in many key roles and supported significant engagement among his bank's team and board. He's also represented Oregon on national councils and always walks his talk. I've appreciated his authentic voice for southern Oregon in Salem and Washington, D.C. during our numerous trips to meet with policymakers. Ken is a great banker and an even greater person."
Trautman leaves behind a legacy of unwavering community support, a refreshing entrepreneurial outlook, and commitment to excellence that all of us at People's Bank look forward to carrying on.
DIRECTOR NEWS
With interest rates reaching their highest in nearly 25 years, 2023 was a tough year for most regional financial institutions. We also witnessed a shakeup in the banking industry with the failure of two large banks. Through all this, People's Bank remains strong. In June, American Banker, a financial industry trade publication, named People's Bank one of the top 200 small banks in the nation based on performance in return on equity, return on assets, and net interest income.
On July 1st, Ken Trautman retired as CEO and became a member of the board of directors. We thank Ken for all his great work as CEO and we value his commitment, talent, and expertise he continues to contribute to our institution.
That same month, Julia Beattie became the third CEO in People's 25-year history. Julia has served in roles such as Chief Lending Officer and Chief Credit Officer over her 10-year history with the bank and brings a wealth of experience to her new position. We welcome her warmly and are confident in her ability to guide People's Bank to great levels of success in the future.
BOARD OF DIRECTORS | BRANCHES | ||||||||
Albany | Ashland | ||||||||
333 Lyon Street SE | 1500 Siskiyou Boulevard | ||||||||
Albany, OR 97321 | Ashland, OR 97520 | ||||||||
541-926-9000 | 541-482-3886 | ||||||||
Roy Vinyard | William C. St. Laurent | ||||||||
Chairman | Vice Chairman | Central Point | Eugene | ||||||
1017 East Pine Street | 360 E. 10th Ave, Ste 101 | ||||||||
Central Point, OR 97502 | Eugene, OR 97401 | ||||||||
541-665-5262 | 541-393-1070 | ||||||||
Grants Pass | Jacksonville | ||||||||
Julia Beattie | Ken Trautman | ||||||||
509 SE 7th Street | 185 E. California Street | ||||||||
Grants Pass, OR 97526 | Jacksonville, OR 97530 | ||||||||
541-955-8005 | 541-702-5070 | ||||||||
Klamath Falls | Lebanon | ||||||||
210 Timbermill Drive | 1495 South Main | ||||||||
Klamath Falls, OR 97601 | Lebanon, OR 97355 | ||||||||
Bob Mayers | Jim Teece | ||||||||
541-273-2717 | 541-223-7180 | ||||||||
Medford | Medford | ||||||||
1528 Biddle Road | 1311 East Barnett Road | ||||||||
Medford, OR 97504 | Medford, OR 97504 | ||||||||
541-776-5350 | 541-622-6222 | ||||||||
Kurt Kaufman | Kerry Johnson | Salem | Steelhead Finance | ||||||
315 Commercial Street SE, Suite 110 | 3518 Heathrow Way | ||||||||
Salem, OR 97301 | Medford, OR 97504 | ||||||||
503-468-5558 | 541-773-3377 | ||||||||
www.peoplesbank.bank | |||||||||
Bryan Webber | Benjamin Mackovak |
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People's Bank of Commerce published this content on 15 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 March 2024 23:32:02 UTC.